COVID-19 Related Funding Options for Independent Contractors and the Self-employed

If you worked as an independent contractor for a company (i.e., Uber, Lyft, Instacart  etc.), and receive a Form 1099 at the end of the year instead of wages reported on a W2, you might be confused about what your options are for receiving money from the government since you were not classified by your company as an “employee.”

But there is help for you, too. Here are some of the options available to you as of this writing (things are changing very quickly):

1. File for unemployment. Although you could not do this before the COVID-19 pandemic, unemployment has been expanded to cover more job situations including lost income from “gig” workers. The CARES Act also known as the stimulus bill, included extensions to state unemployment benefits beyond the normal state limits, and many states have taken it upon themselves to distribute these additional funds themselves so that there is nothing additional that you have to do beyond applying for unemployment through your state’s system. There may be some hassles due to the large volume of people applying at the exact same time but that should change soon, and your money should be direct deposited into your account soon, too.

2. Apply for a PPP loan/grant. As I discussed in a blog last week, you are eligible to receive funds through the Paycheck Protection Program. While small businesses were able to apply on April 3rd, self-employed and independent contractors can start applying with approved banks starting April 10, 2020. Please read the blog for restrictions in the use of these funds and payback or forgiveness options. If you use all of the money provided for the uses specified, you don’t have to pay this money back.

Although this is not entirely clear, it is likely that you will need to have filed tax returns for either 2018 or 2019 to apply for this program. The government has indicated that other types of proofs may be accepted, but this is not a guarantee.

Be patient because there are very long waits already for small businesses seeking funds, and it is likely that the government will need to make some changes in the coming weeks to accommodate the influx of applications to the approved lenders.

Note: if you worked for a small business that gave you a 1099, they cannot claim your wages because the government has indicated that you can apply for your own loan.

3. Apply for an EIDL Emergency Advance. As mentioned in a previous blog, the fastest way to obtain up to $10,000 is to apply for an Economic Income Disaster Loan (EIDL) Emergency Advance through the Small Business Administration (SBA). This loan has less restrictions than the PPP loan/grant, and although it is called a “loan,” it does not need to be paid back. This may be the best option for you if you need money quickly, and the application is much shorter than the PPP loan.

To apply, you can visit the SBA website: https://covid19relief.sba.gov

4. Non-traditional options. There are a lot of people who are giving out money and food right now, whether through social media posts or local government resources, including area food banks. While this might not be ideal, and you do want to make sure that the giveaway is legitimate (never give out any personal or bank account information to a stranger), if you are waiting for funds from any of the above and need of a small amount of money quickly for groceries, etc., you may want to consider these options.

Conclusion

If you have any questions at all about anything I have said here, please feel free to contact us for assistance by calling 844-835-2993. Our team will be happy to point you in the right direction! We also offer free consultations to all prospective clients.