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If I Don’t Have Employees Can I Still Get a COVID Relief Loan?

If I Don’t Have Employees Can I Still Get a COVID Relief Loan?

If I Don’t Have Employees Can I Still Get a COVID Relief Loan?

We’re hearing a lot about how small businesses with employees can leverage programs to help their employees through unemployment benefits with a COVID relief loan; or the Paycheck Protection Program (PPP), but what if you don’t have employees? Or are an independent contractor? Are you still eligible for loans or aid to keep your business going through this COVID-19 pandemic? What about unemployment for yourself? 

The short answer is: yes, you may be eligible for SBA COVID relief loans. Or possibly for Unemployment. But you’ll need a few things to qualify.

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The Economic Injury Disaster Loan

If you work as an individual contractor or a sole proprietor with no employees, you may be eligible for the Economic Injury Disaster Loan, which includes up to a $10,000 emergency grant that will be deposited to your bank account. These grants do not have to be repaid as long as funds are used for: 

  • Meeting increased costs to obtain materials unavailable from the your original source because of interrupted supply chains
  • Making rent or mortgage payments
  • Repaying obligations that cannot be met due to revenue losses
  • Your payroll

You’ll have to be able to show that you have sustained economic injury as a result of coronavirus.

Paycheck Protection Program

Even if you don’t have employees, you may have yourself on payroll, and in that case, you may be eligible for a Paycheck Protection Program Loan (PPP), based on 2.5 times your average monthly payroll expenses. You can request forgiveness of the principal amount of the loan for the eight-week period after you receive if you use it to cover payroll (including your own, if you don’t have employees), as well as interest on mortgage, rent, and utilities. (Note that non-payroll expenses cannot exceed 25% for purposes of loan forgiveness.) 

As part of the loan application process, you may be asked to provide your tax returns or 1099-MISCs to prove your payroll expenses.

Apply for the PPP here.

Can I Get Both?

You can apply for both the PPP loan and an EIDL as long as you don’t use the funds to cover the same expenses. You may be able to get both if, for example, you use the PPP funds to pay your own payroll and the EIDL to other permitted expenses such as to pay vendors that you can’t pay due to revenue loss. 

What About Unemployment?

It’s not a loan, but here’s a financial resource that could alleviate some of the strain right now: the Pandemic Unemployment Assistance Program (PUA). The good news is, even if you’re self-employed with no employees, you may be eligible to receive benefits. That’s not what unemployment benefits guidelines cover under more normal circumstances, but Congress has added 

If eligible, you could receive $600 a week from the federal government, for up to four months. This is in addition to any unemployment benefits available at the state level. This may not be close to what you normally bring in, but every little bit helps.

To be eligible for these expanded unemployment benefits with a COVID relief loan under the CARES Act you must certify that you are otherwise available and able to work but can’t because: 

  • You’ve been diagnosed with COVID-19 or are experiencing symptoms and seeking a medical diagnosis
  • Someone in your family has been diagnosed with COVID-19
  • You are providing care for a family member or a member of your household who has been diagnosed with COVID-19
  • Your child is unable to attend school or another facility that is closed as a direct result of the coronavirus public health emergency, and you are unable to work because you must care for the child 
  • You can’t get to work because of a quarantine imposed as a direct result of the COVID-19 public health emergency or because you have been advised by a health care provider to self-quarantine due to concerns related to COVID-19
  • You have become the breadwinner or major support for your household because the head of the household has died as a direct result of COVID-19
  • Your business is closed as a direct result of the COVID-19 public health emergency
  • You are self-employed, are seeking part-time employment, do not have sufficient work history, or otherwise would not qualify for regular unemployment or extended benefits under State or Federal law or pandemic emergency unemployment compensation

Keep in mind, you may not qualify for unemployment benefits if you have the ability to telework with pay or are receiving paid sick leave, regardless of whether you meet the above qualifications.

See How Much SBA Loan Money You Qualify For

See How Much SBA Loan Money You Qualify For

Use our CARES Act SBA loan calculator to see how much money your business may qualify to get.

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It’s clear that the folks on Capitol Hill are aware of the impact COVID-19 is having on America’s small businesses. If you’re suffering, take advantage of these programs that are designed to help businesses like yours.

Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and Financial Advisors. To review your real-time funding options with one of Nav’s lending experts, please contact us.

This article was originally written on April 6, 2020.

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Susan Guillory

Susan Guillory is a Senior Content Writer for Nav. She’s written books on business and travel, and blogs about small business on sites including Forbes and AllBusiness.

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19 responses to “If I Don’t Have Employees Can I Still Get a COVID Relief Loan?

  1. I am a independent contractor who lives in PA. I am reveiving PUA benefits. I recently received a SBA loan. Can I still apply for PUA, until it ends? And after PAU ends, start to use SBA Loan for payroll? Or is that considered double dipping? Never want to do that!!

  2. Hello,

    My question is can all 1099 misc employees get both EIDL and unemployment. I am some friends who received 1099 from their employer. Will they be eligible for EIDL since they got 1099 misc?

  3. Hi, I am receiving UI benefits now (Stat and Fed) and just received a letter that my application for the relief loan had gone through. How will the SBA loan affect my UI claim? SBA says I am OK to take them with no problem, I don’t believe that and want to be crystal clear before I accept anything else…do you have a definitive answer? I live in Florida

    1. Here’s an answer in the newsletter from the SE Colorado SBDC that may help:

      Q: I am a business owner and received an EIDL Advance while on Unemployment. Do I need to report the EIDL Advance on my next UI Claim?
      A: No, as long as the EIDL Advance is used for other business expenses and not used for income.

  4. Hi there – I am self employed, working in my own office but I also have a 1099 for work in another office and a W2 in a third office. I received the EIDL and PPP, but I also applied for UE to cover my 1099 and W2. The UE application is pending. If I get the UE, will it be deducted from the forgiven amt for the PPP (assuming I am using the PPP money only for my self employment salary)? Thanks for your time! Christie

  5. I am a sole practicing attorney. In my state (NJ) the courts are closed except for very limited video hearings. No Trials or criminal defendants are produced for in person hearings. I only do criminal work and most of that entails jury selection and trials. Both of those are cancelled indefinitely. I have no other employees. I have just received a PPP Loan. Are thewre expenses I can pay with those funds and still collect State Unemployment at the same time? Thank You.

    1. Paulo – So far all we have is guidance provided by Treasury and SBA that states:…”you should be aware that participation in the PPP may affect your eligibility for state administered unemployment compensation or unemployment assistance programs, including the programs authorized by Title II, Subtitle A of the CARES Act, or CARES Act Employee Retention Credits.”

  6. I had two jobs. My main job laid me off vs my second part time job which only closed its doors. No furlough or lay offs. The owner of the second part time job is seeking out a CARES loan. Effectively we are all still employed but are all on unemployment. What happens if the owner gets the loan? Unemployment benefits especially with the enhanced benefits are double in comparison to what all of us would make working there part time. Can we stay on unemployment? Reject money from PPP?

  7. I filled out the paperwork for the grant up to $10,000 on this past Sunday today is Wednesday I have not got any emails about my paperwork I sent in I answer all the questions and they ask where should they send the money to so I have them my bank information I did it on the government website so I no that I was covered but still have not got any money or respond do u know what’s going on

    1. I applied for unemployment but I haven’t been able to complete my application so I applied for the EIDL and now the PPP, can you take all 3? Can I return the PPP if unemployment and the EID grant kick in? I don’t want to over take my share, but even more so I don’t want to take on debt if I don’t have to.

      1. I seen you said if you get the SBA you said that it could be used on rent and mortgage is that only for the business or I can that be used for personal rent and mortgage thank you

    2. I am wondering the same thing. If someone is self-employed (no employees) and is receiving PUA, can they also get the EIDL advance? all 3?

      1. You can apply for both EIDL and PPP. You can’t double dip and use the funds for the same purposes. I haven’t seen specific information about whether you can also get PUA. The
        SBA supplement to the Interim Final Rule says: “you should be aware that participation in the PPP may affect your eligibility for state administered unemployment compensation or unemployment assistance programs, including the programs authorized by Title II, Subtitle A of the CARES Act, or CARES Act Employee Retention Credits.” Unfortunately I don’t know more than that.

        1. If I have a submitted application for PUA in the waiting period, will applying to the PPP and EIDL adversley affect my PUA claim
          or can I be applied to all 3 and see which one is approved and which is the better offer? I was also told that if you file your taxes as an S-Corp with no employees, you are not eligible for PPP. Thank you.