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The good news for gig economy workers is that the Paycheck Protection Program (PPP), a provision of the CARES Act, has not forgotten about you.



The COVID-19 emergency has temporarily created a new world order that is leaving many of us panicking about health and finances. On the financial end, the good news for gig economy workers is that the Paycheck Protection Program (PPP), a provision of the CARES Act, has not forgotten about you. Along with small businesses, sole proprietors, independent contract workers, and gig economy workers are all eligible to apply for the PPP forgivable loan.


What is the PPP Loan?

The PPP offers forgivable low-interest loans to small businesses and freelancers facing financial uncertainty during the COVID-19 crisis. Freelancers are eligible for eight weeks of pay, as well as coverage of some expenses, such as mortgage or utilities.

One thing to know: PPP assistance is called a loan, but by definition of “forgivable,” it can be written off if you follow the rules, which include only using the funds for the following:  Wages, commissions, income, or net earnings from self-employment (capped at $100K), and rent, mortgage and utilities. (So no installing a swimming pool with the funds.). The PPP can cover your office lease, rent, or mortgage interest, provided you had it before February 15, 2020.If you had a home office, you can claim a portion of the expenses.

For the loan to be forgiven, you must spend 75% of the loan funds on payroll costs. (You are allowed to use the other 25% for rent, mortgage, interest and utilities.) You cannot receive unemployment and a PPP loam simultaneously, so you should figure out which option works best for you. And by the way..more good news. A loan that is forgiven is usually treated as taxable income, but this is not the case with the PPP. The amount of any forgiven PPP loan will be excluded from gross income.


How Do I Apply?

To apply, you will need to fill out the PPP application form and provide proof of wages, income, commission or net earnings along with it. A freelancer can apply through any SBA-approved lender. However, rumor has it that some banks are going to be reluctant to issue PPP loans to new customers, so consider one that you have an existing relationship with, or alternatively, a local bank. Check the SBA tool for a lender near you. 


Documents to Prep for Application

The loan will cover 2.5 months of income. To calculate your loan request, locate your average monthly income (either from 2019 or from the past 12 months, depending on what your bank requests), divide it by 12, and then multiply that number by 2.5.

You will need to provide your salary amount as well as proof of income, wages, commission or net earnings with your application. Your salary is determined by your net profit. If you have filed your 2019 taxes, this will be reported on line 31 of your Schedule C. If you have not yet filed your 2019 taxes, you can hire a bookkeeper to create a retroactive income statement for 2019, and for January through March of 2020. You can then use the Net Profit line on your income statement. 

If you have neither of these, you can add all of your 1099-MISC income together. (To find your monthly average, just divide this amount by 12. If your annual net profit is over $100,000, you are only allowed to claim up to $100,000 divided by 12.) In the absence of any of these, bank records may suffice. In addition, the lender will want to see any earnings reports, invoices, or pay stubs – any documentation related to wage, income, commission or net earnings.

If you have not yet filed your 2019 taxes, and you’ve been tracking your income with RoamHR from January of 2019 through March of 2020, you can contact the RoamHR support team for a custom report that displays your earnings by month.

Don’t Wait!

The window for freelancers to apply opened on April 10, and loans will be available through June 30, 2020. There is talk of a possible extension, since the money is going very quickly. Apply soon, and stay well!




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