In the wake of the COVID-19 pandemic, many businesses across the country have struggled to stay afloat. To help alleviate some of the economic fallout caused by the pandemic, the government enacted several financial relief programs, including the Paycheck Protection Program (PPP).

The PPP was first introduced in April 2020 as part of the CARES Act, and provided forgivable loans to small businesses to help cover payroll costs and other expenses. The program was so successful that it ran out of funding within weeks of its launch, leaving many businesses in need.

Now, Congress has approved a second round of PPP funding, which includes some important changes that could benefit independent contractors.

First and foremost, the eligibility requirements for independent contractors have been expanded. Previously, independent contractors could only use PPP funds to cover their own compensation, up to a maximum of $100,000. However, under the new rules, independent contractors can now include payments to other workers – such as employees or subcontractors – in their loan calculations.

This is a significant change that could make a big difference for independent contractors who work with other people. For example, if you’re a freelance graphic designer who hires a subcontractor to help with a big project, you can now include their compensation in your PPP loan calculation, which could result in a larger loan.

Additionally, the new rules allow independent contractors to use an alternative method for calculating their loan amount. Under this method, you can use your gross income as reported on your 2019 tax return (instead of your net income) to calculate your loan amount.

This could be especially helpful for independent contractors who have significant business expenses, such as those who work in industries like real estate or construction. By using gross income instead of net income, you’ll be able to include more of your revenue in your loan calculation, which could result in a larger loan.

Of course, it’s important to remember that the PPP has strict requirements for loan forgiveness, and not all expenses will qualify. However, if you’re an independent contractor who has been impacted by the pandemic, the new PPP round 2 could be a lifeline that helps you weather the storm.

To apply for a PPP loan as an independent contractor, you’ll need to work with a participating lender. The application process can be complex, so it’s a good idea to work with a financial advisor or accountant who can help you navigate the process and ensure you’re eligible for loan forgiveness.

Overall, the new PPP round 2 is good news for independent contractors who are struggling to make ends meet. By expanding eligibility and changing the loan calculation rules, the program offers more options and flexibility for those who need it most.