Editor's Note: This blog has been updated as of April 16, 2020.

With the recent passage of the CARES Act as a result of the COVID-19 crisis, self-employed individuals and independent contractors are eligible to participate in the Paycheck Protection Program (PPP). The PPP program is a loan program that allows for up to 100% of the loan to be forgiven on a tax free basis.

What is the PPP?

To learn more about the PPP program please watch our webinar on the CARES Act which discusses how the PPP and loan forgiveness works. Please understand the loan forgiveness details have not been finalized for self-employed individuals as yet and our webinar was recorded prior to certain updates to the law being released. More updates are expected in the coming days. For loan amounts that do not qualify for the loan forgiveness feature, the interest rate will be fixed at 1%, the first payment will be due six months from the conversion date of the loan and total repayment is expected to occur over a two year time period.

April 10^th—important date!

Banks will begin accepting loan applications from self-employed individuals and independent contractors on April 10, 2020. If you have not contacted your primary bank, we suggest you contact them soon to find out what information they will need to process your application.

What information do you need?

You will need your most recent tax return or current profit and loss statement to determine your monthly payroll. Our suggestion is to add the following amounts from your tax return or the corresponding amount from your Profit & Loss Statement:

Self-employed with no employees:

• Schedule C Net Income line 31, not to exceed $100,000

Self-employed with employees should also add to the amount above:

• 2019 gross wages paid to your employees using 2019 IRS Form 941 Taxable Medicare wages from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from taxable Medicare wages, less any amounts paid to an employee in excess of $100,000
• Schedule C Employee Benefits, line 14 (Employer paid Health Insurance for the Employee)
• Schedule C Retirement plan benefits, line 19 (Pension and profit-sharing plans)
• State unemployment taxes paid by the employer for the year

How do you calculate the payroll cost?

1. These amounts above should be added together and divided by 12 to determine your monthly average payroll cost.
2. Multiply the monthly average by 2.5 to determine your maximum amount of loan available to request.
3. The self-employed individual is considered an employee for this application form.

If the PPP loan is not of interest to you, please note that under the CARES Act, most self-employed individuals and independent contractors are eligible for state unemployment benefits if they have been forced to shut down as a result of the COVID 19 crisis. Please visit your State Department of Labor website to apply. We have linked RI's

Please note in certain circumstances, you may not apply for both unemployment and the PPP loan.

Navigating through all of the information and programs available to impacted businesses may be overwhelming. KLR advisors are available to assist you navigate the best path forward during this unprecedented crisis. With a completely remote workforce our advisors are always available.

Visit our Coronavirus Resource Center for more information.