With COVID-19 cancelling concerts everywhere, it’s helpful to know your options for SBA Loans for Musicians. If you missed the June 30 deadline for the Paycheck Protection Program (PPP), it has just been extended until August 8. We previously wrote about the PPP here.
The SBA still has $130 Billion available for PPP loans. Those “loans” could be forgiven entirely, when you spend the money on qualified expenses, such as payroll. If you are a self-employed musician, take a closer look at the PPP. If you have Schedule C self-employment income (1099), you are an eligible small business!
The PPP was designed to support small businesses, to help them keep employees on the payroll and off unemployment. So, if you are already collecting Unemployment Benefits, you may lose them temporarily if you receive the PPP.
PPP and Unemployment
The extra $600 a week in unemployment is set to expire at the end of July. If you can time it right, you could collect unemployment through the end of the month, then switch to the PPP for 8 weeks starting August, once you receive that loan. You could pay yourself the full “average monthly earnings” as calculated in your PPP application, rather than the reduced Unemployment Benefits. That’s the benefit in applying for the PPP. The eligible period for spending the PPP has been increased from 8 weeks to 24 weeks. However, it might be preferable to pay yourself over 8 weeks, if that would allow you to resume or start unemployment benefits.
Under the Pandemic Unemployment Assistance (PUA) program, states are providing up to 39 weeks of unemployment benefits. Generally, this will run through the end of December. There is some discussion in Washington to extend the extra $600 a week (or maybe $450). We will have to wait and see what happens! For now, it might be best to assume these programs expire as scheduled, and plan accordingly.
EIDL and the PPP
For musicians who previously accepted the EIDL (Economic Injury Disaster Loan), you can still potentially do the PPP. The EIDL advance ($1,000 for individuals) would reduce the forgivable amount of the PPP loan, but you can just repay that $1,000 and close out the PPP loan. Here are instructions on applying for the PPP if you already took the EIDL.
SBA Loans for musicians are offering an important life jacket during this difficult time. I really want to get back to making music and miss it terribly. Until that is possible, we need to avail ourselves of any and all resources to stay afloat and keep paying the bills. If you want financial planning specific to musicians, I am accepting new clients this summer and we can help you with the issues you are facing today.