Letter from Blair Benjamin
Director of Assets for Artists
Monday, April 29, 2020
I'm writing to make sure folks in our artist-network are thinking about whether they would be a candidate for federal small business relief through the SBA "PPP" program that re-opened for a 2nd round today (and which likely won't be open for longer than a the middle of next week, so quick action is critical). If you're wondering whether this might apply to you, here are some things to consider:
Did you earn a "net profit" on a Schedule C (Profit or Loss from a Business, Line 31) on your 2019 federal tax return. If you had a net profit of more than about $10,000 in 2019, then you may be a good candidate for a helpful amount of PPP small business relief. (Note that you do NOT have to pay yourself or anyone on a formal "payroll" to qualify for this payroll protection program. Having "net profit" on your Schedule C is equivalent to having an actual payroll for yourself, and the SBA has made clear that's sufficient to qualify.)
If you haven't already done your 2019 taxes (since they're not due until July 15), do you think or know that you earned some business profit in 2019 (more than a few thousand dollars of profit), and would you be able to make at least a draft of your 2019 Schedule C (based on your real 1099 forms from 2019 and any other gross income figures, along with your best estimates about the expenses that will show up on your 2019 Schedule C)? The SBA will accept a draft version of your Schedule C.
If you have a 2019 Schedule C with a decent amount of net profit, it's pretty straightforward to submit an application for PPP small business relief, so read on.
The amount of your PPP "loan" will be automatically calculated to be just over 20% of your 2019 total net profit, and the amount that will be forgiven (that you don't have to pay back) will be roughly 8/52 (8 weeks worth) of your 2019 total net profit. So about 75% (or possibly a bit more) of the PPP loan amount will be forgiven for self-employed people with no other employees. You don't have to prove how you're spending that portion of the money. It's just intended to be relief for the "owner compensation" that you would "normally" have been able to earn from your business activities without this crisis.
Another thing to remember is that if you're qualifying for unemployment compensation during the pandemic, this PPP relief might reduce your unemployment. It's not totally clear how these two forms of relief will affect each other, but it seems likely that they will. A lot of self-employed people are trying for both because who knows what will come through, and that's totally fine to do. If your profit was very low in 2019 and if it has totally dried up during the crisis, then unemployment benefits will probably work out better for you.
This may sound like a lot of paperwork and hassle, and it's true that you DO have to be willing to wade through some numbers and file various forms to be able to qualify, but so far it seems easier than I expected (easy enough for many people to do it without an accountant), and it could be a significant amount of money if you had business profit in 2019.
I'm available to help you think it through if you're confused about whether you're likely to qualify and how to submit an application. (You don't apply directly to the government -- you generally go through a bank or online lender, but I could give you some suggestions for that. Several banks in Massachusetts are trying hard to prioritize very small businesses owned by women and people of color in this new round of funding.
If you’d like to schedule a call with Blair or simply have a few specific questions, you can fill out our 1-on-1 coaching form and Blair will get back to you shortly! Note: Due to staff and funding restrictions, we can only provide support for artists who live and are applying for support in MA, RI or CT.
Review our other COVID-19 resources here.