Congress recently signed the CARES Act to help relieve Americans of the economic impact COVID-19 has had in the US. As part of this stimulus package, there has been a Small Business package included. This $350 billion dollar program is called the Payroll Protection Program (PPP), and independent contractors can begin applying on Friday April 10th!
We put together this video and article to help guide you understand what this program is.
Are you qualified?
Most insurance agents in the US are paid as independent contractors. You’ll know if you are one if you are given a 1099 each year or a W-2. If you were receiving 1099’s, you are an independent contractor and are eligible under this program.
If you are paid by a W-2, your employer, if they have less than 500 employees, can apply and pay you an average of what you earned in commissions over the last 12 months.
Here are the important details of the PPP:
- The maximum amount of the loan is 8 weeks of your average previous 12 months earnings (up to 100k), plus expenses for rent, mortgage interest and utility costs – which are no more than 25% of your 8 weeks earnings.
- You have to certify that you need the loan due to the impact of the Coronavirus.
- The interest rate is 1% and payments are deferred for 6 months.
- The loan can be forgiven based on how much you pay yourself plus your actual expenses
- There are no personal guarantees or collateral requirements
- Whatever isn’t forgiven has to be paid within 2 years
To apply for a PPP loan, you need to contact your bank. Make sure they are a Small Business Association lender, or a SBA lender for short. The SBA is the only association that will be writing the approval for these loans through member banks. The total amount of these loans are limited to $350B, and while that sounds like a lot, it is expected to run out quickly. This means you will want to take advantage of the Payroll Protection Program quickly.