We’ll just come right out and say it: This sucks.
The economic woes created by the COVID-19 pandemic has meant a 60% reduction in freelance assignments, according to one survey. Freelancers are also dealing with massive delays in payments. Here’s the silver lining: Because the situation is so dire, the government has no choice but to offer a helping hand. The self-employed make up 35% of the U.S. workforce, so we’re too big to ignore. In addition to the extension for filing 2019 taxes and the stimulus checks, Congress passed a historic act that includes several provisions for freelancers.
The CARES Act of 2020
At the end of March, Congress passed the CARES Act, which earmarks $250 billion of the $2 trillion stimulus package for unemployment benefits. For the first time, these unemployment benefits will extend to the self-employed, through the Pandemic Unemployment Assistance program. CARES also increased unemployment benefits for up to four months, adding a flat $600 per week on top of what individuals already qualify for.Under the CARES Act, every state has the option to offer unemployment benefits to the self-employed. New York was quicker to offer it than most, and if you’re a resident, you can check out their Pandemic Unemployment Assistance form for self-employed workers. Michigan, Washington, Massachusetts, and Pennsylvania have also moved quickly to get their self-employed residents into PUA programs, while self-employed workers in California, Ohio, and Florida have been left in the lurch. Even states that have the resources to respond have to deal with unprecedented demand – crashed sites and long waits are the norm. Besides unemployment, the CARES Act also establishes a few emergency loans for small businesses, including sole-proprietors and LLCs. These included the Paycheck Protection Program and the Economic Injury Disaster Loan, both loans that have low-interest rates and may qualify for debt forgiveness. Unfortunately, the Small Business Association recently announced that funds had run out. Congress may replenish those funds, but banks warn that the money will quickly evaporate. If you do want to apply for a loan, make sure to get in touch with your bank as soon as possible, so you can pounce when the time is right.
- Paycheck Protection Program
The Paycheck Protection Program offers loans to cover wages, as well as a portion of your rent, mortgage payment, and utilities, for up to eight weeks. If you use the loan to cover your wages, this loan should be forgivable. As of April 10, the application process is open to freelancers, although lenders may not be as eager to work with them; some outlets have reported that banks are only offering loans to freelancers who already have business accounts with them. And the sheer amount of applications has slowed the approval process.
- The Economic Injury Disaster Loan (EIDL)
The Economic Injury Disaster Loan (EIDL) also offers an emergency grant that doesn’t need to be repaid. The limit is $10,000, although it will probably be much lower for solo freelancers with no employees. You don’t have to have secured an EIDL in order to receive the grant, so this can be a good way to quickly get cash for your business. Keep in mind that if you also receive a PPP loan, the amount you secure through an EIDL emergency grant would be subtracted from the forgivable portion of that loan. Freelancers can’t get both a PPP loan and an EIDL to pay the same bills, but you can refinance an EIDL into a PPP.It’s a lot to take in, we know. May we suggest...
Financial Planning Advice
If you’re not sure how to navigate the help that the CARES Act offers, you might want to speak with a financial planner. The Financial Planning Association has put out a list of financial planners that have volunteered their services, for free, to low-income freelancers affected by the pandemic.
Relief Funds for Freelancers
Freelancers are working furiously to help each other out. Check out these detailed spreadsheets for freelance artists – they offer surveys about the effects of event cancellations, as well as geographically-specific resources for gig workers. You might have stiff competition, but it’s always worth looking at what grants you can apply for. The Freelance Co-Op and Freelancer’s Union are both accepting donations for their freelancer relief funds.
Help with Basic Needs
If you need help covering the costs of daily life, the nonprofit Gig Workers Collective has put together a long list of resources for freelancers who need assistance for food, medical care, rent, utilities, and internet.You can also dial 211 to ask about assistance in your area.
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