Independent contractors receiving 1099-MISC forms and self-employed workers may now apply for forgivable Paycheck Protection Program loans through the U.S. Small Business Administration, marking a significant change in relief fund eligibility.
The change went into effect on Friday, April 10.
In order to be eligible, individual businesses must have been in operation on Feb. 15, and must also have been harmed by the ongoing COVID-19 pandemic, federal officials say.
Loans may be as large as 2.5 times a contractor’s average net monthly income, based on 1099-MISC or net self-employment income earned over the last calendar year.
The loans may be used to replace normal net income, capped at $100,000 per year, per employee. They may also be used on mortgage payments, rent and utilities, so long as these financial obligations were in place as of Feb. 15.
In the first eight weeks, all loan money spent on replacing net income is forgivable. Money spent on mortgage interest, business rent and business utilities is also forgivable in the first eight weeks, although if more than 25% of money taken out goes toward those costs, it may not all be forgiven.
The PPP loans come with a fixed 0.5% interest rate and a six-month deferment period.Â
For in-depth analysis on the PPP program, click here to read a recap of HBJ’s first webinar on the matter.Â
