Have you heard about the PPP loan? And aren’t sure what it is and if it’s for you?
If you’ve been doing gig work before February 15th, 2020 (before COVID-19), you may qualify for forgivable loans through the PPP. A lot of gig economy drivers may not have bothered with this program. But for drivers with the proper criteria, PPP might be a lifesaver. With recent changes to this program under the Biden administration, and the extended deadline to apply (May 31st), gig workers should take advantage.
What Is PPP?
PPP stands for Paycheck Protection Program. PPP is a government loan to provide small business incentives to keep their employees on their payroll during the COVID-19 crisis. Small Business Administration (SBA) supports the loan.
During the peak of COVID-19, many businesses (especially those in the restaurant, hospitality, and travel industry) had to cut back on costs. One result is a lot of employees got laid off. To prevent an economic collapse, the US government incentivized businesses to keep people employed with the PPP.
Biden Administration Changes
The Trump Administration had a Coronavirus relief law called the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Biden administration passed the American Rescue Plan Act of 2021 (ARPA). Under both of these acts, most small businesses or nonprofits with under 500 employees are potentially eligible for a PPP loan if they meet the criteria.
The American Resue Plant Act added $7.25 billion to the PPP and expanded eligibility to other businesses.
The original deadline to apply was March 31st, 2021. But a day before that, Congress passed the PPP Extension Acts and extended the deadline to app for PPP loans to Mat 31, 2021.
Gig Workers Are Eligible
One fundamental change is this: sole proprietors, independent contractors, and self-employed individuals are allowed to receive more financial support. The Biden administration revised the PPP’s funding formula for these people. Drivers who do food delivery, rideshare, and other gig work are eligible for more financial support.
A lot of you do food delivery on the side and have a job. So you don’t see yourself as a business owner. But you are in the eye of the SBA. Just because you don’t write a check to yourself doesn’t mean you don’t have payroll. The income you get from your food delivery, and rideshare work is payroll.
How Much Money Can Gig Workers Get With A PPP Loan?
The maximum amount you can borrow the first time is 2.5 times your average monthly payroll cost. Up to $10 million. It’s pardonable if you use at least 60% of it on the payroll.
For example, I averaged with just food delivery alone about $4,500 a month in 2020. I’m not including rideshare and grocery delivery earnings in this example. I can borrow a maximum of 2.5 x that $4,500 average.
How Much Money Is Available?
Last I checked, as of last week (April 14th), the SBA has given out $755 billion of the $813.5 billion. So $51 billion are still available. You can this amount here.
PPP Is A Loan
Before you read on, I want to make it clear that the PPP is a loan. It’s not free money. Yes, it’s a forgivable loan, but it’s not free money. If it is, they’d called it a grant.
Get Started
The SBA is currently offering PPP loans until May 31st, 2021. The program is very straightforward. To get started, go to the PPP site, and click “Get matched with a lender.”
Then follow these steps
- Answer a few questions about your business (takes 5 minutes)
- Get matched with potential lenders who are interested in your loan
- Talk to the lenders to compare rates, terms, fees, and other details
- Apply for the loan you want
Types of PPP Loans
There are two types of PPP: First Draw PPP Loans and Second Draw PPP Loans.
If you have not received a PPP loan before, then you’re eligible for these.
If you have previously gotten a PPP loan, some businesses are eligible for a Second Draw PPP loan.
Fast Lane Application With Womply
The program is through the government, so obviously, some bureaucracy means it won’t go quickly. There’s a lot of details involved for many people, depending on their situations and financials during the COVID-19 crisis. There are a lot of government and regulatory guidelines. It can get kind of messy.
If you’re looking for quick ways to apply for PPP, I’d recommend Womply.
The Womply has a service called PPP Fast lane. You’ll need the following items below. Most importantly, you will need your Schedule C taxes filing from 2019 or a draft of your 2020 filing.
The Womply PPP FAQ page provides answers to many good questions about the PPP for first-time borrowers.
