Federal loans resume for gig workers, small businesses

Attention gig workers and freelancers: You can apply for federal Economic Injury Disaster Loans and loan advances if your gig was financially impacted by the coronavirus.

The Small Business Administration began accepting new applications Monday, June 15 via its website, and funds are available on a first-come-first-served basis. Applications are also open to small business owners who employ no more than 500 workers.

“To meet the unprecedented need,” SBA Administrator Jovita Carranza said in a news release that the agency has implemented a host of new changes to the program and the application process since the first time around, when the agency ran out of funds in less than two weeks.

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Today @SBAgov reopened the Economic Injury Disaster Loan and Advance program to all eligible small businesses and non-profits impacted by #COVID19. APPLY HERE: https://t.co/cXeF9sXS5o

— Jovita Carranza, SBA (@SBAJovita) June 15, 2020

Self-certification process

To qualify for loans and loan advances, you must be experiencing “substantial economic injury as a result of COVID-19,” as determined by a self-certification process. Self-certification basically means you pinky-promise that the information you provide is true, and if it’s not, you assume the consequences of felony fraud charges.

Loans are up to $150,000 with long-term repayment options. For typical small businesses, the interest rate is 3.75%. For non-profits, it’s 2.75%. The loan amount was reduced from the previous maximum of $2 million during early rounds of applications in March.

Loan advances are payments of up to $10,000 or $1,000 per employee. These advances are effectively grants because they don’t have to be repaid.

Pro tip

As a freelancer or gig worker, you are eligible for a $1,000 grant because you “employ” one person, yourself.

You can apply for both the loan and the loan advance through one streamlined application, which will take about two hours to complete, the SBA estimates.

Any business-related expense

The grant and loan funds can be used toward any business-related expense that you’re struggling to pay due to the economic impact of the pandemic. For a freelancer, that might include rent or home-office supplies. The funds can also supplement a general lack of income due to a dip in clients. Some limitations on how the funds can be used apply if you’ve received a loan through the SBA’s Paycheck Protection Program.

The $2 trillion CARES Act established the PPP program and boosted the longstanding disaster loan program with an infusion of $376 billion. As a result, the Small Business Administration received a torrent of applications for both programs in late March and early April and blew through the first round of funding in a matter of days. The SBA stopped accepting loan applications on April 15.

Congress replenished SBA’s coffers with an additional $370 billion in late April. On May 4, the SBA reopened applications but only to agricultural businesses, which typically aren’t eligible for assistance.

For the first time since April 15, small businesses and independent contractors from all sectors can apply for financial assistance through the SBA’s disaster loan program.

Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, entrepreneurship and unique ways to make money. Read his latest articles here, or say hi on Twitter @hardyjournalism.

This was originally published on The Penny Hoarder, a personal finance website that empowers millions of readers nationwide to make smart decisions with their money through actionable and inspirational advice, and resources about how to make, save and manage money.