Freelancers And The Paycheck Protection Program | Ep 192

Top Articles

New users get 1 year FREE of M1 Plus and earn $30 if they fund their accounts with $1000 or more in the same month!

  • $0 commission-free trading
  • Investing made easy with automatic rebalancing
  • Low 2% rate for emergencies or to consolidate loans
Share This Post
Share on facebook
Share on linkedin
Share on twitter
Share on email
Share on pinterest
Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.

Travis Hornsby from the Student Loan Planner joins us to discuss the Paycheck Protection Program.

The Paycheck Protection Program (PPP) is part of the CARES act that was passed to deal with the economic fallout of COVID. PPP allows small businesses to get a forgivable loan for 2.5 times your monthly payroll costs (plus a few other things such as rent and utilities).

The point is to keep people employed during this time. Most businesses are getting hammered in this economy right now. To attempt to avoid massive layoffs the government is offering this forgivable loan to try to allow businesses to keep their employees.

That’s great, however, a lot of businesses work with freelancers and contractors instead of hiring employees. At first, money paid to freelancers was included as payroll for purposes of the PPP. But that changed.

It was determined that because freelancers can apply for the PPP themselves that they shouldn’t be included in payroll costs. But that puts business that hire freelancers in a weird spot. They still need to pay those freelancers if they want work performed.

If you have W-2 employees you should qualify for the loan and if you use the money to pay your payroll costs the loan will be forgiven.

It gets more complicated for freelancers.

How To Calculate Your PPP Amount As A Freelancer

Look at your 2019 income. Take your annual income from 2019 and divide by 12 to get your average monthly income. Then multiply that by 2.5 to get your PPP loan amount.

Keep in mind you can include some of 2020’s income instead if you want. So if using your income from April 2019 – March 2020 gives you a higher average monthly income, you can use that instead.

As a freelancer, to qualify for forgiveness, simply use the money to pay yourself.

Check out this article from PT Money for more details about the PPP and how to apply.

 

Related Episodes:

Subscribe To The FI Weekly

Action, accountability, inspiration, and community. Join the movement. Get started on your Path to FI

Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.
More To Explore