Today, Friday, April 10 marks the first day independent contractors and self-employed workers can apply for forgivable loans through the Payroll Protection Program – a $349 million segment of the $2 trillion federal CARES Act. Independent contractors receiving 1099-MISC forms and self-employed individuals are eligible to apply for these, potentially 100 percent, forgivable loans.

REQUIREMENT: You must have been in operation on Feb. 15, 2020, your business must have been harmed by the COVID-19 pandemic, and you must submit required documentation along with your loan application.

WHAT DO I NEED TO APPLY? Once you know with which lender you will apply, complete the PPP application and submit with the required documentation to an approved lender by June 30, 2020.

WHERE CAN I APPLY? Existing SBA lenders and any federally-insured depository institution, federally insured credit union, or Farm Credit System institution is eligible to make PPP loans. Other regulated lenders will be available to make these loans once approved and enrolled in the program. Consult your local lender to determine if it is participating. Visit the SBA’s website for a list of eligible lenders.

A number of Chamber member financial institutions are handling U.S. Small Business Administration PPP loan applications. The Chamber has reached out to each of these members to determine availability and have learned that many are prioritizing applications from their existing customers. We recommend you contact your existing bank to determine if they are participating as lenders in the new PPP.

If you would like specific contact information for one of the banks/credit unions accepting new members, we would be happy to make an introduction. Please contact Karen Pelletier, executive vice president, via email.

FOR ASSISTANCE | In addition, the Center for Women and Enterprise, the MA Small Business Development Center Network, and MassDevelopment can aid in the application for PPP loans as well as the SBA’s Economic Injury Disaster Loan program.

• The maximum loan size is up to 2.5 times a contractor’s average monthly 1099-MISC or net self-employment income for the past 12 months
• All amounts spent on the following list of items during the first eight weeks of the loan term are 100 percent forgivable: (a) to replace your 1099-MISC income or your net self-employment income, (b) interest on mortgages, (c) business rent, and (d) business utilities. Note, if more than 25 percent of this amount is used for interest on mortgages, business rent, or business utilities not all of the amount spent may be forgivable.
• The interest rate is fixed at 1 percent and the loan term is 2 years
• Loan payments will be deferred for six months
• No collateral or personal guarantees are required
• Neither the government nor lenders will charge small businesses any fees for the loans.

FOR WHAT CAN I USE THESE LOANS? You should use the proceeds from these loans on your:
• Replacement for your normal 1099-MISC or net self-employment income (capped at $100,000 on an annualized basis for each employee)
• Interest on mortgage obligations, incurred before Feb. 15, 2020
• Rent, under lease agreements in force before Feb. 15, 2020
• Utilities, for which service began before Feb. 15, 2020

NOTE: A previous version of the PPP application guidelines included language precluding companies from calculating compensation figures which reflected independent contractor fees as well as independent contractors and the self-employed themselves from applying for the loan program. Those provisions were lifted today.