COVID-19: Guide to SBA Loans
Nearly all professional photographers (who are U.S. citizens) will be eligible for one or more programs funded through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides financial assistance for Americans affected by the COVID-19 pandemic.
There are three main programs to consider. All are offered through the Small Business Administration (SBA):
- Payroll Protection Program (PPP) for small businesses with employees (opened April 3)
- Economic Injury Disaster Loan (EIDL) for small business owners and freelancers
- Payroll Protection Program (PPP) for freelancers (will open April 10)
The Payroll Protection Program (PPP) offers companies with 500 employees or fewer (and who have sustained an economic injury as a result of the pandemic) up to $10 million dollars in the form of a short-term (1-3 years) low-interest (as little as 1%) loan. Calculate your average monthly payroll prior to the pandemic, and they’ll loan you 2.5 month’s worth of that. If you maintain your previous staffing levels and you can show that you use most of that money for salaries (which can include your own) and the remainder for rent and other business expenses, they will forgive all or part of the loan. You can apply through your bank or directly through the SBA.
You can also apply for an Economic Injury Disaster Loan (EIDL), which provides long-term loans (up to 30 years) at a somewhat higher rate (3.75%). Even if you don’t want to take that loan, you can apply for a $10,000 grant (which will be forgiven if you meet certain requirements) using a very simple application.
On April 10th, the SBA will also be rolling out an additional loan program for independent contractors and self-employed individuals.
A couple of reports I've heard from photographers but have not confirmed:
- If you applied for a PPP loan in March and your confirmation number starts with a 2, you may need to reapply. If you applied in April and your confirmation number starts with a 3, you have filled out the current forms.
- The Vox article (below) says that you can apply for the PPP loan directly to the SBA. However, I have also heard that you need to apply through a commercial bank. We'll report back if we can get clarification on those items.
Here are two excellent (and recent) articles that provide more detail on these programs:
- Vox: How small businesses can get money from the stimulus package
- The New York Times: F.A.Q. on Coronavirus Relief for Small Businesses, Freelancers and More