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.
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.
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.
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.
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37 responses to “If I Don’t Have Employees Can I Still Get a COVID Relief Loan?”
Can I apply for the loan if I don’t have a business
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!!
Andrew – Please check with your state unemployment agency.
I am a self employed small business owner. I have been receiving UI benefits while my business has been closed due to covid once they did finally get to me amidst their extremely overwhelming amount of requests. I just received my EIDL advance monies, and have been searching for specifics on what exactly I can or cannot use the money for. I (like so many others) have have had to scrape by to cover the normal operational costs (i.e. rent, utilities) for the last few months myself. Are you allowed to reimburse your business for those particular costs during this pandemic? The payments I have made have completely wiped out what money I would have for operating from here forward. Not to mention the lost revenue during the busiest time of the year (when i usually am able to put money aside for the leaner months that follow.) I guess I am not clear on whether I can only use it for upcoming rents, utilities and other business operating expenses of that nature? I am nervous to even touch it until I have better information about it! I don’t want to spend it improperly in accordance with the guidelines (that I haven’t received- probably due to them also being over inundated with so many requests.) I am not even clear on “yes or no” you do pay this back, or “yes or no” do I report this to UI. With all of this so new for everyone, my bank manager was really not sure of these answers either. I would greatly appreciate if you have some input.
Thanking you in advance for some solid clarification.
Did you see this article we published? 5 Ways You Can and Can’t Use Your EIDL Loan
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?
Independent contractors may apply for EIDL. It is our understanding you can’t double dip and use EIDL funds to pay yourself while you’re receiving unemployment. If you do, you should make sure you check with your unemployment office to see how you need to report it.
I was approved for unemployment early on and have been receiving payments. I just recently got accepted for a SBA EIDL loan. Not the PPP. I can’t find info anywhere on whether I can keep unemployment if I use the EDIL loan on business expenses and be sure not to use the loan on payroll. I am self employed with no employees. I’m not ‘double dipping’ this way. Is this allowed?
I haven’t seen specific guidance on that question either unfortunately. I would assume you can use EIDL for business expenses other than payroll and avoid jeopardizing PUA but I can’t speak for the SBA or unemployment agencies.
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
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.
Same question but from the opposite concern: I have been receiving Pandemic Unemployment Assistance (with PUC) and was just now approved for an SBA EIDL loan (only $5,100). I am concerned that if I accept the EIDL loan I may lose my Unemployment benefits (which over the next two months will amount to more than what SBA is offering).
When I originally applied for SBA I did not have Unemployment.
Is it safe to accept the SBA loan? Do I need to inform the SBA that I am now receiving Unemployment compensation?
I was unemployed and caregiving for my mother, who had cancer. I am also a carpenter by trade. In this time I was preparing to re-enter the workforce as an independent contractor as my mothers condition was terminal. She passed away while this lockdown was/is in effect. My intent was to begin taking on jobs as I have 25 years experience in home remodeling and working as or for general contractor. Would I be eligible for this grant or whatever due to inability to get into homes and to work?
I would suggest you apply to find out.
I’m finding all kinds of info on pPPP and unemployment. It nothing on EIDL and Unemployment. Can I collect Unemployment and EIDL?
I haven’t seen specific guidance on that either unfortunately. EIDL may be used for certain non-payroll expenses but I can’t say how unemployment may view it. This article may be of interest.
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
I am in the same situation….. I own a small business and applied for ppp loan and now have been approved. I also part time work ,1040, for another company who has put me on Standby leave. I qualify for my UI benefits. Can I get both UI benefits for my 1040 part time job and receive my PPP loan too?
You can’t double dip and use PPP for your payroll and unemployment at the time time. Beyond that I haven’t seen specific guidance.
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.
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.”
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?
I have applied twice and don’t know if it was accepted. If it is accepted, when will the loan be transferred?
Mark – Did you apply for EIDL or PPP? For EIDL you can call the SBA at 1-800-659-2955. For PPP you’ll need to contact your lender.
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
It’s taking a while for these applications to be processed. We updated our FAQs about applying for EIDL with more information about checking on the loan status.
I applied for a covid 19 sba loan, and I am currently receiving unemployment. If I qualify for the sba loan, do I claim the money from the loan as income for the week it is deposited in my account? I can’t get thru to unemployment to find out if I need to claim as income.
We don’t have clear specific guidance on this question unfortunately. I also don’t know which kind of SBA loan you got – PPP or EIDL? If PPP then I would assume you must report the PPP income you use for your own payroll over the covered period – the time you spend the funds on your payroll. (Here’s our forgiveness article.) If you are talking about EIDL then, again, it would seem you’d need to report it for the time you pay yourself. I wish I could be more specific but I have not seen clear and specific guidance on this question.
Can you do all 3?
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.
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
Tina – this article may help you: 5 Ways You Can and Can’t Use Your EIDL Loan
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?
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.
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.
I applied for the sba loan and received it within 24 hours. It was $10,000. I had my bank to wired it back the same day I received it because im receiving the full amount for pua. Right after I applied for the sba loan, i seen a you tube video concerning one cannot double dip. Did i do right? What are the consequences for returning it? Will this affect me if I want to apply later, if the government extends these programs again?