President Joe Biden signed the Paycheck Protection Program (PPP) Extension Act of 2021 into law, extending the Paycheck Protection Program an additional two months to May 31, 2021, and then providing an additional 30-day period for the SBA to process applications that are still pending. This is an ongoing FAQ for questions about applying for the PPP for small businesses and individual artists, with a focus on freelancers and contractors.
As with Springboard's primary coronavirus page, this is an evolving list of resources for information, exchange, and support in this time. Accuracy at any given point cannot be guaranteed as this is a fast-moving and evolving situation. If you have updates or resources to add, please send them to firstname.lastname@example.org.
Please consult a lawyer, accountant or other professional before making any decisions! The information on this page is not intended or implied to be a substitute for professional advice. To find a lawyer, please see our primary MnLA page.
Thanks to Garrett Prehatney from the University of Minnesota Law School for his assistance in compiling these resources.
Last updated April 1, 2021
What is a PPP Loan?
PPP is a forgivable loan program that helps small businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.
Hey, wait, I thought this expired. Are these funds still available? Was it extended?
Yes and yes. The first iteration expired last August, in 2020. The second iteration of the Paycheck Protection Program had previously ended on March 31, 2021, but it has been extended through May 31. All eligible entities can apply through a participating lender until then.
Who is eligible for the loan?
You are eligible for a loan if you are a small business that employs 500 employees or fewer, or if your business is in an industry that has an employee-based size standard through SBA that is higher than 500 employees. This also includes tribal businesses and 501(c)(19) veteran organizations. This also includes sole proprietors, independent contractors, and self-employed persons.
What about nonprofits?
Yes, nonprofits are eligible. 501(c)(3) nonprofits, including religious organizations, will be eligible for the program. Nonprofit organizations are subject to SBA’s affiliation standards.
I’m a “small business,” but it’s just me as a sole proprietor, and I don’t have any employees. As an independent contractor or gig economy worker, am I eligible?
Yes. Sole proprietors, independent contractors, gig economy workers, and self-employed individuals are all eligible for the Paycheck Protection Program.
I didn't apply last time. Am I eligible?
Yes. You're eligible for "First Draw" PPP loan, which you can read more about here.
I did apply last year, and received a PPP loan. Am I eligible?
You may be. PPP now allows certain eligible borrowers that previously received a PPP loan to apply for a "Second Draw" PPP loan with the same general loan terms as your First Draw PPP loan.
Second Draw PPP loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations. Read more here.
What has changed since last year for sole proprietors and independent contractors?
Previously, sole proprietors were able to apply for a PPP loan using their 2019 or 2020 net income as reported on a Schedule C. After March 3, 2021, PPP loan calculation process is different.
If you aren’t running payroll, your PPP loan amount will be calculated using your gross income as reported on line 7 of a 2019 or 2020 Schedule C. This is a major change from last year, when calculations were made based on net income.
To find your average monthly payroll expense, take your gross income (up to a maximum of $100,000) and divide it by 12. Take your average monthly payroll expense and multiply it by 2.5. This will be your PPP loan amount.
How to apply
Where can I apply for the Paycheck Protection Program?
You can apply for the Paycheck Protection Program (PPP) at any lending institution that is approved to participate in the program. This could be the bank you already use, or a nearby bank. Most have an online application.
What if I don’t have a bank?
You don't need to have a regular bank to apply for PPP. There are thousands of banks that already participate in the SBA’s lending programs, including numerous community banks, possibly in your community. It doesn't even need to be your regular bank or lender, even if you do have one. You don’t have to visit any government institution to apply for the program. You can call your bank or find SBA-approved lenders in your area through SBA’s online Lender Match tool. In Minnesota, you can also call your these Small Business Development Center or WomenVenture and they can provide free assistance and guide you to lenders.
There are also nonprofits, organizations and online providers, including services like PayPal or BlueVine, that can handle PPP loans. Twin Cities LISC is approved for businesses and organizations in North Minneapolis, on Lake Street in south Minneapolis and the Frogtown/Rondo and East Side neighborhoods in St. Paul. Priority for these is with BIPOC-owned businesses.
I’m ready to apply. What do I need to have ready?
If you’re a Sole Proprietor, Independent Contractor or Self-Employed Individual, you need these items proving your income for 2019 or 2020:
+ Form 1040 Schedule C for Sole Proprietors and Independent Contractors. This is the form where you list your income and expenses for your business. Regardless of whether you have filed a 2020 IRS tax return, you must provide a 2019 or 2020 Form 1040 Schedule C with your PPP loan.
+ 1099 forms.
+ Payroll Processing records and Payroll tax filings (if relevant).
+ Bank records, if the above are unavailable. This can be screenshots or PDFs of account statements.
+ Routing and bank account information, for direct deposit.
Is it for me?
What if I am really reluctant to take out a loan? I don’t want to get trapped making payments if the economy is still in shambles in a few months or a year.
If you make sure to meet the requirements for loan forgiveness, then you would not need to make any payments as the loan would be forgiven. If you are required to repay any of the funds, payments will be deferred for at least 6 months. Ultimately, you are the only one that can decide if this program is right for your business. If you have questions about your specific situation, contact a lender using the Lender Match tool.
Is this a loan? It sounds like a grant.
With a grant, the money is given with no strings attached. With the PPP loan, there are requirements that need to be met in order for the loan to be forgiven. There is also a separate loan forgiveness application that needs to be filed. If the conditions for forgiveness are not met, then the loan does need to be repaid.
Uses for PPP
How can I use the money so that the loan will be forgiven?
The amount of principal that may be forgiven is equal to the sum of expenses for payroll, and existing interest payments on mortgages, rent payments, leases, and utility service agreements. Payroll costs include employee salaries (up to an annual rate of pay of $100,000), hourly wages and cash tips, paid sick or medical leave, and group health insurance premiums.
What parts won’t be forgiven?
If you would like to use the Paycheck Protection Program for other business-related expenses, like inventory, you can, but that portion of the loan will not be forgiven. To receive full loan forgiveness, a borrower must use at least 60 percent of the PPP loan for payroll costs, and not more than 40 percent of the loan forgiveness amount may be attributable to non-payroll costs.
It’s just me, and I don’t have payroll. What can I use it for?
If you aren’t running payroll, your PPP loan amount will be calculated using your gross income as reported on line 7 of a 2019 or 2020 Schedule C. (Remember, this is the part different than last year.)
To find your average monthly payroll expense, take your gross income (up to a maximum of $100,000) and divide it by 12. Take your average monthly payroll expense and multiply it by 2.5. That will be your PPP loan amount.
Timeline and forgiveness
When is the loan forgiven?
The loan is forgiven at the end of the 8-week or 24-week period after you take out the loan. Borrowers will work with lenders to verify covered expenses and the proper amount of forgiveness. If you submit to your lender a loan forgiveness application within 10 months after the end of your loan forgiveness covered period, you will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to your lender (or notifies your lender that no loan forgiveness is allowed).
How do I apply for loan forgiveness?
Self-employed individuals can use a simplified forgiveness application called Form 3508S. This form applies to you if your loan amount is $150,000 or less. But again, check with your lender.
Am I responsible for interest on the forgiven loan amount?
No, if the full principal of the PPP loan is forgiven, the borrower is not responsible for the interest accrued in the 8-week or 24-week covered period. The remainder of the loan that is not forgiven will operate according to the loan terms agreed upon by you and the lender.
Other loans and relief payments
I’m on Unemployment Insurance benefits. Will that affect my benefits?
Yes, your PPP funds for payroll will affect your unemployment benefits. Once the PPP funds are exhausted you may then be eligible to reapply for unemployment.
For additional information, please visit the SBA PPP webpage:
We have set up a fundraiser to expand the Personal Emergency Relief Fund, so that we can continue to support artists, contractors, and freelancers in Minnesota who have lost income due to Coronavirus/COVID-19. Please click below to give online, or send a check to:
Springboard for the Arts
Attn: Individual Giving
262 University Avenue West
Saint Paul, MN 55103
If you have any questions about individual giving, please contact Katie Hae Leo, Development Director, at katiehl@springboardforthearts, or 651-292-4381.