Breaking News

Independent Contractors and Sole Proprietors Eligible for PPP and SBA Disaster Loans

By SEMA Washington, D.C., Staff

Independent contractors and sole proprietors are now eligible to enroll in the U.S. Small Business Administration’s (SBA) emergency loan programs along with other small businesses. As of April 10, 2020, independent contractors, sole proprietors and 501(c)(3) organizations may apply for a Payroll Protection Program (PPP) loan. It is a two-year loan at 1% interest rate that can be used to cover payroll costs, mortgage interest, rent and utilities. Loan proceeds will be forgiven for the amount used to cover payroll, mortgage interest, rent and utilities over the eight-week period after the loan is made. A PPP loan can be up to 250% of monthly payroll subject to a $10 million cap.

Under a separate program, independent contractors, sole proprietors and most non-profit groups including 501(c)(4) and 501(c)(6) organizations may apply for an emergency Coronavirus disaster loan at a 3.75% interest rate for small businesses and 2.75% for non-profits. The first $10,000 is a grant that doesn’t have to be repaid. If a PPP loan is provided at a later date, the disaster loan amount will be deducted. The maximum amounts currently being reported for a disaster loan range from $25,000 to $35,000. Those amounts could increase if Congress provides more funding for the disaster loan program.   

Both loan programs are experiencing a huge demand and backlog on processing. The PPP loan is through a participating bank or local community lending institution. The disaster loan is through the SBA. The U.S. Congress is expected to pass legislation to increase funding for PPP loans, although partisan disagreements over providing additional funding for hospitals and state and local government has slowed down action on the bill. 

For more information, visit SEMA’s website.

Questions? Contact Stuart Gosswein at