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Covid virus

Musicians: How to receive stimulus money

By KEN DEROUCHIE // A message to my fellow musicians who are self-employed, independent contractors. It could help yo receive stimulus money and get you safely through the COVID-20 crisis.


Hey all, most of you probably don’t know that in my day job I am a practice analyst at a consulting firm. I also helped found and am currently the editor of a practice management magazine for doctors. I’ve spent the past 30 years working with doctors to teach them business and management in their private practices. That being said, I’ve been doing a lot of research over the past few days regarding the Paycheck Protection Program (PPP) that is part of the government stimulus package for small businesses.

On Friday, April 3rd the application process for the PPP for small businesses opened up. Meaning that qualified businesses were able to start submitting their applications for the Paycheck Protection Program. This program allows small businesses (under 500 employees and having been in business prior to Feb 15th 2020) to receive a “loan” that will cover payroll for their entire staff for an 8-10 week period. At least 75% of the total loan has to go toward staff payroll and you can’t lay anyone off. If you’ve already laid people off, hire them back and they will be covered and paid. These loans can also be used to cover rent, mortgage interest payments and utilities.

While researching this info for my day job I discovered that on Friday April 10th this program will be opened up to Independent Contractors and Self Employed Individuals. As soon as I read this a light went off in my head and I immediately thought of all of my musical brothers and sisters who have lost their ability to make money while everything is shut down.

For those of you that are full time musicians, those that are 1099 musicians or band leaders that have a tax id number, this will apply DIRECTLY TO YOU!

Here’s the deal, even though the PPP is a “Loan” program, if you follow the rules of the loan than it will be forgiven. This specifically means that YOU WILL NOT HAVE TO PAY IT BACK. I’ll repeat that, THEY WILL PAY YOU FOR 10 WEEKS WAGES BASED ON YOUR 2019 AVERAGE EARNINGS AND YOU WILL NOT HAVE TO PAY IT BACK! Furthermore, you will not have to pay taxes on the amount of the loan.

The published information from the treasury.gov   site specifically states:
The loan amounts will be forgiven as long as:
- The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and
utility costs over the 8 week period after the loan is made; and
- Employee and compensation levels are maintained.

I am going to include some links to the specific info for you all. I encourage you to download the info and follow the instructions. Read it for yourselves.

I spent a large part of my evening last night calling some musician friends of mine about this program and what to do. I’ve emailed them out this info and am extending my help on this if you need it. My boss at the consulting firm I work for has also offered to help.

First off, download the PDF file on the Paycheck Protection Program (PPP) Information Sheet for Borrowers. This was obtained directly from the treasury.gov web site. I have put it on my web server for easy access. You can download it here: http://kdband.net/…/PPP-I…/Treasury-Gov-PPP-info-april-2.pdf

 Read this document fully so that you understand how it works. If you run into any words you don’t understand, look them up. You want to know this information.
Secondly, download the PPP Loan application. The first 2 pages of this document are the actual application, the other 2 pages are just information, explaining what the sections of the application mean. You can download it here: http://kdband.net/…/Paycheck-Protection-Program-Application…
CNN Business has a great, straight forward article I recommend you read. https://www.cnn.com/…/s…/small-business-sba-loans/index.html

I will say this, the application process will be a lot easier if you already have a business checking account established with your bank. If you don’t, you’ll have to do some extra leg work in order to be able to submit your PPP application.

Here’s some great info from thefinancebuff.com:

 Paycheck Protection Program (PPP)
The primary purpose of the Paycheck Protection Program is to cover payroll. For a self-employed person, payroll includes paying yourself for services you perform. The PPP loan will be a two-year loan at 1% interest rate. Up to 100% of the PPP loan may be forgiven.

The government runs this program through participating banks and credit unions. It’s probably easier if you go through the institution where you already have a business checking account. I for one don’t have a business checking account, because I use the business account from Fidelity Investments and Fidelity isn’t a bank. Many independent contractors only use a separate personal checking account, not one officially designated as a business checking account. In that case you may have difficulty in finding a bank that takes your application.

For example, Bank of America at first required that you must have a business checking account and a business lending relationship with them since February 15, 2020. Only opening accounts now doesn’t work. After people protested, now they still require a business checking account since February 15, 2020 and you don’t have a business credit card or business lending relationship elsewhere. That means if you have a business credit card with Chase, Bank of America doesn’t take you; they want you to go to Chase. Meanwhile Chase requires that you have a Chase Business checking account that’s been active since February 15, 2020. If you have your business checking account with Bank of America and your business credit card with Chase, neither bank takes you.

What if you are like me and you also don’t have a business checking account, or the bank that has your business checking account doesn’t take your application? If you go to SBA’s website and find their district offices near you, you will see that each district office has a website. (https://www.sba.gov/local-assistance/find/…)

In the middle of each Resource Guide, there is a list of local SBA lenders in the district. For example, the list for Northern California is on page 30 of the 52-page Resource Guide. Start calling and visiting those banks’ websites and see which bank will take your application for the Paycheck Protection Program. Using the Resource Guide for my district, I found a local credit union that has an online application for PPP loans. I completed and signed the application online. I attached Schedule SEs from our 2019 tax return as evidence for our payroll. If this credit union accepts my application, I will happily open accounts there.

After you find a bank that takes your application—you can only apply through one bank—you will follow the bank’s procedures and give them whatever information and documents they ask from you. The bank will determine how much they will lend to you under the program.

After you take the loan and you use the loan for eligible purposes, you can apply for loan forgiveness. The bank will determine how much of the loan will be forgiven. It may be 100% of the loan amount, or it may be less. Right now you first need to find a bank, put your application in, and hope they will process it soon. You worry about loan forgiveness later. You won’t have any amount forgiven if you don’t get the loan in the first place.

Source: https://thefinancebuff.com/covid19-loans-self-employed-appl…

 Much love, health and happiness to each of you.


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