Subject: Apply for PPP: $110 Billion Still Available + PUA Portal Now Open

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Word came this morning from DECD Commissioner David Lehman that there is still $110 Billion available in the Small Business Administration's (SBA) Paycheck Protection Program (PPP). All cultural nonprofits are urged to apply. 1099s, under certain conditions, may also apply.

On a separate note the SBA is still processing the Emergency Injury Disaster Loan (EIDL) program applications. Some of our members have received them, most are still waiting.
If you have not yet applied for the Paycheck Protection Program, please consider doing so. The PPP provides forgivable loans to small businesses and non-profits with less than 500 employees. 75% of the loan must be used for payroll expenses, with the remaining used on rent, mortgage interest, or utilities. More information about the PPP can be found on the SBA website.

You apply for the PPP through a bank or lending body. Connecticut has more than 350 SBA-approved banks and credit unions that can help your organization secure this critical funding. If you do not have an existing banking relationship, you can also apply for this program through approved online lenders (fintechs) like PayPal, QuickBooks, Bluevine, Funding Circle, Kabbage, OnDeck, and Square.

Diane Nadeau, President and CEO of the Windham Chamber of Commerce, advises that many banks are backed up, however, and offers to help organizations apply and find a “faster way to get through the process.”
CAN 1099s APPLY?
From Diane Nadeau:
"Self-employed people can absolutely apply for PPP. If they do, it is based on their taxes, schedule C, line 31. If that is little or 0 or negative then they wouldn’t qualify for any dollars. If it is better, then they can collect unemployment under Pandemic Unemployment Assistance program, going back to Feb. 5, which also qualifies them for the FPUC of $600 from March 31 on. If they apply now and get the PPP, when they get the money, they will have to stop applying for unemployment, use the PPP to pay themselves. If they are still not back to work or open when the 8 weeks of PPP end, they can go back on federal unemployment."

Q&A on 1099s & the PPP 
What Documents Do 1099 Employees Need to Apply for a PPP Loan?
  • 1099-MISC
  • 2019 Schedule C, which is now required. If you haven’t yet filed a Schedule C, you must complete one and submit it with your 1099-MISC
  • Your birth date
  • A color copy of your Driver’s License (front and back)
  • A voided check for your business bank account
  • If you have 941 Quarterly Tax Filings (2019, 2020 Q1) or 944 Annual Tax Filings (2019), they should be submitted
  • You can visit our complete step-by-step guide to completing an application for full instructions. 
Will a PPP Loan for a 1099 Employee Be Forgivable?
Any funds used for forgivable uses in the first 8 weeks should be forgivable. Because PPP loans are based on 2.5 times your payroll costs as a 1099 employee, theoretically you would use 2 times your monthly payroll costs to cover 8 weeks of your pay, starting from the date your loan is getting funded.

Due to the demand for PPP loans, it’s estimated that 70% of the total loan amount will need to be used for payroll expenses in order for the entirety of the loan to be forgiven. If a 1099 employee receives a loan for 2.5 times their average monthly income and uses 2 times their average monthly income over 8 weeks, 66% of the loan would be used for payroll. The amount used on payroll will be eligible for forgiveness, but it remains a mystery if the 66% used to replace 1099 wages will be enough to satisfy the requirements for the full loan, so you may be expected to repay some of it.

As a conservative approach, 1099 employees can apply for a PPP loan amount less than the maximum. If you applied for a loan that was only 2 times your average monthly payroll costs, theoretically the whole thing would be forgivable.

Are PPP Loans Automatically Forgiven for 1099 Employees?
No. All PPP loan recipients must apply for loan forgiveness through their lender. We don’t know exactly what that process looks like yet because the SBA hasn’t released guidance.

Can You Receive Unemployment at the Same Time as Your PPP Loan?
No. PPP loans cannot be used for the same purpose as other government funds at the same time. So you cannot receive unemployment at the same time as you’re using PPP funds to cover lost payroll.

If you are currently receiving unemployment, you will have to cancel it starting on the date your PPP loan is funded. If you are still suffering from lost wages after PPP funds have been exhausted, you can apply for unemployment through your state agency.

Can You Choose the Start Date For the Loan?
You cannot choose the start date for the loan. The loan term begins the day you receive funds. 
After a computer glitch delayed it for several days, the Pandemic Unemployment Assistance portal is now open on the CT Dept of Labor's website. A reminder: applicants need first to apply for regular unemployment assistance and, when denied, can then apply through this portal. See news story here.
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