PPP Loans, Revisited

The new round of funding makes PPP loans available to first-time borrowers who missed out on the first rounds of funding. Sole proprietors, freelancers, and self-employed individuals can apply, as well as small businesses with 500 employees or below.  Those who have already received a PPP loan may apply for an additional loan, as long as they have already used (or will use) the entirety of the previous PPP loan and have experienced at least a 25% reduction in at least one quarter of 2020 as compared to the same quarter in 2019. (The business must also have 300 or fewer employees to qualify to apply for an additional PPP loan— a qualification Guild members can meet!)

Recipients of PPP loans should keep accurate and detailed records on how the loan amount is spent to be sure they qualify for the loan forgiveness. Additionally, freelancers and small studios with employees are highly encouraged to check with an accountant to be sure they are tax compliant. The PPP loan amount will not be considered taxable income for federal taxes, but individuals will need to check for guidance on their state and local tax obligations. Additionally, expenses covered by the PPP loans cannot be deducted on 2020 tax returns.

Assistance for Qualifying Mixed Earners of $400/month

When the CARES Act was passed last year, some mixed earners—those who earn an income from both a W2 and from self-employment— did not qualify for Pandemic Unemployment Assistance (PUA). If a mixed earner’s W2 income was high enough to meet state unemployment insurance requirements, they were ineligible to receive PUA support. However, their state unemployment benefits were calculated from their W2 income alone and excluded their reported self-employment income, resulting in artificially low unemployment benefits.

The COVID relief package provides those mixed earners with $100/week in Mixed Earner Unemployment Compensation; only those who do not qualify for PUA may apply. To qualify, the individual must be receiving at least $1/week in traditional (not PUA) state unemployment and must have reported at least $5,000 in self-employment income in the previous year. The state must also be participating in the program. (As of this writing, only Mississippi, South Dakota, and Idaho are not participating.)

States are still setting up their mixed earner programs. Once those are in place, individuals will be able to qualify for retroactive support to December 27, 2020.

For more information on the Mixed Earner Unemployment Compensation, visit mixedincome.org.