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  • Writer's pictureRon Gallen

Artists and Self-Employed Covid-19 Benefits

Updated: Apr 28, 2020

People who work and get a W-2 have filed for unemployment benefits in a tidal wave of website-crashing benefit claims. Through Thursday, there were already 26.5 million claims filed for unemployment benefits. And most states have not been able to process anywhere near all the people attempting to file. Let's figure the real total at somewhere north of 30 million now (that's 20% of the whole work force). But artists and self-employed people, professionals and gig workers, don't qualify for those benefits.

Luckily, the emergency CARE act contains a special new benefit for artists and the self-employed, called PUA or Pandemic Unemployment Assistance. Everyone in those categories now does qualify for payments under this provision, if their job is stopped by virtue of the pandemic. The payments are not as big as they are under the regular unemployment benefits, but they are far from nothing. Especially since whatever your state pays, including extensions now up to 39 weeks, the federal government is adding $600/week from March 29th through the end of July. For instance, in California the PUA payment is $167/week (low). But you will actually collect $767/week. The $167 payments will continue through December 31st as long as you are unemployed due to the pandemic.

You will have to provide a tax return either from 2018 or 2019 showing you as being self-employed. But that's about all you will have to do in order to file a claim.

If, on the other hand, if you have employees, then there is another program called PPP or Payroll Protection Plan. This is meant for companies to retain employees with an SBA loan to cover their payroll. The PPP provides a loan for up to 2 months of total payroll which is forgivable if you use the funds to make payroll. They also allow you to borrow up to 2.5 times the monthly payroll, and will forgive up to 25% of the loan for expenses like rent and utilities. In other words, if your payroll is $10,000/month, then you can borrow up to $25,000 and it can all be forgiven if you use $20,000 to pay the two months payroll and the other $5000 to pay rent, etc( you must keep records to show that is where the funds went). The only requirements to qualify for an SBA loan under PPP are a Schedule C from 2019 (you don't have to have filed your taxes yet, you just have to fill it out the right numbers from last year and upload it).

There are many banks processing these loans for the SBA and you can fill out the application online at their sites. Places like Square credit card processing are also processing the applications and make it very easy indeed with the same terms as any bank. You don't have to make payments for 6 months and the interest rate is 1% for whatever part of the proceeds that don't qualify for forgiveness. It's pretty great. Self-employed people being given what amounts to free money to pay themselves!

The great thing is, even if you are the only employee, you get to claim as payroll for you the monthly amount from the net profit on your Schedule C from 2019. In other words, if your net profit on your 2019 Schedule C is $120,000, then you can get a PPP loan for up to $30,000 (2.5 times your monthly pro-rated net income of $10,000) that is all likely forgivable.

You cannot qualify for both the PPP and the PUA unemployment benefit. You have to choose one. Since self-employed unemployment insurance also qualifies for the additional $600/week, your net income would have to be over $40,000 on your 2019 Schedule C to make applying for a PPP loan worth it as opposed to the PUA unemployment insurance. Of course, there is a large backlog of applications for both the self-employed unemployment insurance and the PPP. But the unemployment will eventually be paid to you from whenever your claim begins. The PPP backlog, though, means it is probably too late to get in on the current round of financing congress has approved but you can get in the line for the next round, which looks likely if that makes more sense financially. The backlog from the first round even at a small local bank was over 2000 applications..

Anyway, there's plenty of money being made available. Go get it.

Here's a hub from the New York Times on all things Covid financial:

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