Federal Support for Small Business Owners and Independent Contractors Impacted by COVID-19

Updated April 2, 2021

The COVID-19 pandemic is having a serious impact on the American economy. With recent actions taken by the federal and state governments, ASHA members who own small businesses, private practices, or operate as independent contractors may now qualify for emergency resources. We will update the following information as new developments emerge. 

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Note: The following information should not be considered financial or legal advice.

Forgivable Loans and Emergency Grants for Small Businesses

Paycheck Protection Program

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress established the Paycheck Protection Program (PPP).

This program provides eligible small businesses with government-backed interruption loans, which could then be forgiven based on the borrower keeping its employees on payroll.

The PPP has received funding and program modifications through the CARES Act, the Paycheck Protection Program and Health Care Enhancement (PPPHCE) Act, and the Paycheck Protection Program Flexibility Act (PPPFA). The Consolidated Appropriations Act, 2021 provides additional funding for ‘First Draw’ PPP loans for those who have not already received a PPP loan, as well as for ‘Second Draw’ PPP loans for those who have previously received a PPP loan.

Applications for the PPP are being accepted through May 31, 2021.

The benefits of this program include:

A flexible loan to cover operating expenses. The program provides a 'First Draw' loan equal to 10 weeks of a company’s payroll, up to $10 million. This may be used to pay the payroll, rent, and utilities that allow a small business to keep its doors open. A ‘second draw’ loan of up to $2 million is available for businesses that have used funds from a ‘first draw’ loan. 

Loan forgiveness. Borrowers have up to 24 weeks to spend loans on payroll, rent, mortgage payments, and utilities. In order to qualify for loan forgiveness, borrowers must spend at least 60% of their loan on payroll. The PPPFA included two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce:

  • If the recipient is unable to rehire former or similarly qualified employees; or
  • If the recipient is unable to return to the same level of business activity due to the COVID-19 public health emergency

Incentives to rehire. While reductions in workforce usually result in a reduction in loan forgiveness, the program allows companies that already laid off workers to rehire them while still benefiting from full loan forgiveness.

Broadened eligibility. Participation in the program is open to all businesses and 501(c)(3) nonprofits with fewer than 500 employees or that meet Small Business Administration’s (SBA) small business criteria, as well as sole proprietors, independent contractors, and self-employed persons. PPP ‘second draw’ loans are open to qualified borrowers with fewer than 300 employees.

Streamlined application process. The program operates directly through financial institutions, with the government waiving many requirements normally associated with such loans in order to provide small businesses relief as fast as possible. Applicants are not required to demonstrate any specific hardship, only make a good faith certification of the loan’s necessity and that it will be used to retain workers.

Things to Know About the “Paycheck Protection Program”

Applying for the Program

The Paycheck Protection Program operates via the Small Business Administration’s existing 7(a) lending program, which SBA offers guarantees on loans made by participating financial institutions. Applicants apply for a 7(a) guarantee directly through a participating financial institution, and, if approved, receive an SBA guarantee on their loan. Applicants may apply through May 31, 2021.

Under this program, approved lenders will be directly delegated the authority to approve loan and forgiveness applications based on the determination that a borrower was in business on February 15, 2020, and paid employees or contractors.

Applications will be accepted through the SBA’s streamlined Coronavirus Relief Options webpage. This webpage provides information on applying for the PPP, as well as other programs including the EIDL Loan Advance, SBA Express Bridge Loans, and SBA Debt Relief. Borrowers have to certify that the current public health crisis makes the loan necessary for their continued operations, and that they will use the loan to maintain their previous average number of monthly full-time equivalent employees. This good faith certification is in contrast with any specific demonstration of need, which could have slowed down the application process. 

Required Documents

Borrowers should expect to submit documentation such as payroll numbers demonstrating their eligibility to participate in the program. Additionally, the legislation explicitly requires contractors and sole proprietors to establish their eligibility with payroll tax filings, Form 1099-MISC, and documentation of income and expenses.

Business Eligibility

Participation in the Paycheck Protection Program is open to businesses, 501(c)(3) nonprofits, and veterans’ organizations that have fewer than 500 employees or meet one of SBA’s industry-specific small business thresholds. Sole proprietors, independent contractors, and some other self-employed individuals are also eligible. ‘Second draw’ loans are available to eligible small businesses with 300 or fewer employees who can demonstrate a loss of at least 25% of gross receipts in any quarter during 2020 compared to the same quarter in 2019.

Covered Expenses

SBA will offer a 100% guarantee on a loan amounting to the recipient’s average monthly payroll costs over the previous year, times 2.5. In other words, this loan amounts to two and a half months of payroll costs. The maximum loan amount is $10 million for ‘first draw’ loans and for $2 million for ‘second draw’ loans. 

For the purposes of loan amount and forgiveness (see below), payroll is define as consisting of: (1) salary, wage, commission, or similar compensation; (2) cash tip or equivalent; (3) payment for vacation, parental, family, medical, or sick leave; (4) dismissal or separation pay; (5) health care or retirement benefits; (6) state and local payroll taxes; and (7) payments to sole proprietors and independent contractors that are a wage, commission, income or otherwise net earnings from self-employment. The calculation of payroll costs excludes compensation to employees exceeding $100,000 on an annualized basis, federal payroll taxes, compensation to employees residing outside the United States, and leave for which the employer is receiving a tax credit under the “Phase II” coronavirus response. 

While loan amount is calculated based on payroll costs, the loan itself can be used for a variety of essential business expenses including payroll, rent, mortgage interest, interest on debts, and utilities. 

Loan Forgiveness

Loans made under the program may be forgiven for the total amount that the borrower spent on payroll (excluding annualized compensation over $100,000) mortgage interest, rent, and utilities in the 24 weeks following their loan’s origination. Employers are additionally allowed to make extra payments to tipped employees to account for their loss of tips. Forgiven expenses are generally restricted to obligations undertaken before February 15, 2020.

Note: Forgiven debt is not counted as taxable income.

The amount of forgiveness is reduced proportionally to any reduction in the borrower’s workforce, as well as any reduction in employee salary beyond 25%. Borrowers that have already taken action to reduce their workforce and eliminate any reduction in staff or salary through this program will not be penalized. The SBA is additionally able to issue de minimis exemptions from any reduction in forgiveness.

To calculate the portion of the borrower’s covered costs that will be forgiven, participants should multiply their eligible operating costs by the quotient of: (1) The average monthly number of full-time-equivalent (FTE) employees during the 24-week period; and (2) The borrower’s average monthly number of FTE’s during their choice of two periods—February 15, 2019-June 30, 2019 or January 1, 2020-February 29, 2020.

To achieve forgiveness, a borrower submits to their lender documents including: (1) state or federal payroll documents; (2) documentation of mortgage interest, rent, or payroll expenses; (3) certification that the information is true; and (4) any other documentation that SBA determines is appropriate. The lender will then have 60 days to determine the appropriate level of forgiveness, at which point SBA would purchase and forgive the relevant amount of the initial loan.

Any portion of the loan not forgiven will remain guaranteed by SBA and have a 10-year maturity and at most a 4% interest rate. Lenders will be required to defer payment of that loan for 6-months to 1-year, with the ultimate deferral period set by SBA.

Paycheck Protection Program and SBA’s Economic Injury Disaster Loans (EIDL) 

Borrowers who have received a COVID-19-related EIDL loan (see below) are allowed to apply for a Paycheck Protection loan or refinance their EIDL into a Paycheck Protection loan. Any EIDL grant award provided under the CARES Act is subtracted from a borrower’s loan forgiveness.

EIDL Loans and Grants

In addition to the Paycheck Protection Program, the CARES Act provides relief to small businesses through SBA’s EIDL program, which traditionally provides operational liquidity to small businesses in disaster areas. EIDL Emergency Advance will provide an immediate advance of up to $10,000 grants to eligible businesses, which will not have to be repaid. These changes are in effect through the end of 2020.

The SBA has resumed accepting new EIDL and EIDL Advance applications.

Things to Know About EIDL Loans and Grants

Program Eligibility

The CARES Act expands eligibility for EIDL to businesses, private nonprofits, and cooperatives with fewer than 500 employees, as well as small businesses currently recognized by SBA. Sole proprietors, independent contractors, and some other self-employed individuals are also eligible. The statute broadly expands EIDL’s scope to better account for the COVID-19 outbreak by treating emergency declarations under the Stafford Act (which President Trump has already invoked) as a trigger for EIDL eligibility. During this or a similar crisis, the SBA Administrator can, at their discretion, designate what states or subdivisions have suffered sufficient economic damage to justify small businesses in those areas receiving EIDL loans. 

EIDL Emergency Advance

While EIDL is traditionally a loan program, the CARES Act and PPPHCE Act provide $70 billion for SBA to provide emergency advances through the program, which do not have to be repaid. By applying for an EIDL, any eligible applicant will automatically receive an emergency advance on that loan of up to $10,000. While this payment is technically an advance, it explicitly does not need to be repaid; even if the applicant is denied for their loan or chooses not to accept the full loan offer, the advance will be considered a grant. 

Submitting an Application 

Applications will be accepted through the SBA’s streamlined Coronavirus Relief Options webpage. This webpage provides information on applying for the EIDL Emergency Advance, as well as other programs including the Paycheck Protection Program, SBA Express Bridge Loans, and SBA Debt Relief. In order to receive an EIDL Emergency Advance, eligible businesses must complete the EIDL application and self-certify their eligibility under penalty of perjury. The emergency advance of up to $10,000 will be automatically be made available to eligible applicants. 

To streamline the disbursement of grants, the CARES Act waved several items normally required for the EIDL application process, including: (1) a personal guarantee on advances and loans over $200,000; (2) the requirement that applicants have been in business for more than one year; and (3) the requirement that applicants cannot find credit elsewhere. The process is further expedited by allowing applicants with apply solely with a credit score, rather than tax documentation.

EIDL Emergency Advances Money Usage

EIDL Emergency Advances can be used for: (1) providing paid sick leave to employees unable to work due to COVID-19; (2) maintaining payroll during business disruptions; (3) meeting increased costs arising from supply chain disruption; (4) making rent or mortgage payments; and (5) repaying obligations that cannot be met due to revenue loss. 

EIDL and the Paycheck Protection Program

Funds received under the EIDL program would be counted against any forgiveness an applicant receives under the Paycheck Protection Program.

Tax Incentives

These laws include several tax incentives that may be of value to ASHA members in small business attempting to navigate the COVID-19 pandemic.

  • Employee Retention Tax Credit. Allows employers to claim a refundable payroll tax credit equal to 70% of wages (maximum of $10,000 in wages per employee per quarter) paid to employees during the crisis. The credit is restricted to employers who see a full or partial suspension of operations due to a shutdown order or who see gross receipts decline by more than 20% relative to the same quarter the previous year. For employers with more than 500 full-time employees, the credit is restricted to wages paid to employees not providing service due to COVID-19. For employers with fewer than 500 full-time employees, it is applicable to all wages.
  • Delay of Payroll Taxes. Allows employers to defer payment on the employer contribution of Social Security payroll taxes through the end of the year. Half of this deferred amount would be due to be paid on December 31, 2021, and the other half by January 1, 2022.
  • Modification of Net Operating Losses (NOL). Allows NOLs from 2018, 2019, and 2020 to be carried back five years and allow NOLs to fully offset income. This change is intended to allow businesses to use losses and amend prior year returns to provide liquidity during the outbreak. 
  • Modification on Limitation of Losses for Sole Proprietors and Pass-Throughs. Temporarily lifts the loss limitation for sole proprietors and pass-throughs with the intention of allowing them to utilize excess losses to provide necessary cash flow.
  • Increase to Interest Expense Deduction. Raises (from 30% to 50% of taxable income) the limitation on interest that businesses are allowed to deduct from their 2019 and 2020 taxes.
  • Technical Amendment Regarding Qualified Improvement Property (QIP). Corrects an error in the 2017 Tax Cuts and Jobs Act (P.L. 115-97) preventing businesses from writing off facility improvement costs immediately rather than over 39 years.

For more information about COVID-19 related tax incentives, ASHA recommends visiting the Internal Revenue Services’ COVID-19 website.

Paid Leave

On March 18, 2020, President Trump signed into law a bill (P.L. 116-127) requiring companies to provide limited paid sick and family leave to employees impacted by the COVID-19 outbreak. Two days later, the Treasury Department, Internal Revenue Service, and Department of Labor outlined their intention to implement the legislation expeditiously.

Both benefits are limited to individuals directly affected by COVID-19, whether caring for themselves or others and are in effect through March 31, 2021. The provisions apply to employers with fewer than 500 employees; the Department of Labor can exempt certain small businesses with fewer than 50 employees, as well as health care workers and emergency responders. 

The SBA has published additional resources including informative fact sheets for employers, fact sheets for employees, and frequently asked questions.

State Disaster Assistance

The SBA provides information about state disaster assistance in all 50 states, the District of Columbia, and U.S. territories.

Unemployment Insurance

The Families First Coronavirus Response Act (FFCRA), the CARES Act, and the Consolidated Appropriations Act include several provisions to provide additional flexibility for state unemployment insurance agencies, and to expand states’ ability to provide unemployment insurance for many workers impacted by the COVID-19 pandemic, including for workers who are not ordinarily eligible for unemployment benefits. These programs, which work together, are the Pandemic Unemployment Compensation (PUC), Pandemic Emergency Unemployment Compensation (PEUC), and Pandemic Unemployment Assistance (PUA).

Additional Eligibility

The PUA provides emergency unemployment assistance to workers who are left out of regular state UI or who have exhausted their state UI benefits (including any Extended Benefits that might become available in the future). Up to 50 weeks of PUA are available to workers who are immediately eligible to receive PUA. The PUA creates a series of new eligible groups, including those individuals who are self-employed or independent contractors, those who quit their job as a result of the virus (including to care for a family member), or those whose employer is forced to close due to the virus.

The PUA program will provide income support to many workers who are shut out of the state UI systems in this country. Workers who are eligible for state UI are not eligible for the PUA program.

Those eligible for PUA include self-employed workers, including independent contractors, freelancers, workers seeking part-time work, and workers who do not have a long-enough work history to qualify for state UI benefits.


The PUC benefit ensures that all regular unemployment insurance (UI) and PUA claimants will receive their usual calculated benefit plus an additional $300 per week in compensation. The PUC is a flat amount for those on UI, including those who are receiving a partial unemployment benefit check. PUC also goes to those receiving the new PUA program described below. The PEUC provides an additional 24 weeks of state UI benefits, which will become available after someone exhausts all their regular state UI benefits. To receive PEUC, workers must be actively engaged in searching for work. However, the CARES Act explicitly provides that “a State shall provide flexibility in meeting such [work search] requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction.”

Applying for UI Programs

Individuals who are unemployed because of the COVID-19 pandemic can apply for UI through their state agency that administers their unemployment program.

PUA applicants will need to provide self-certification that they are (1) partially or fully unemployed, OR (2) unable and unavailable to work because of one of the following circumstances:

  • They have been diagnosed with COVID-19 or have symptoms of it and are seeking diagnosis;
  • A member of their household has been diagnosed with COVID-19;
  • They are providing care for someone diagnosed with COVID-19;
  • They are providing care for a child or other household member who can’t attend school or work because it is closed due to COVID-19;
  • They are quarantined or have been advised by a health care provider to self-quarantine;
  • They were scheduled to start employment and do not have a job or cannot reach their place of employment as a result of a COVID-19 outbreak;
  • They have become the breadwinner for a household because the head of household has died as a direct result of COVID-19;
  • They had to quit their job as a direct result of COVID-19;
  • Their place of employment is closed as a direct result of COVID-19; or
  • They meet other criteria established by the Secretary of Labor.

Workers are not eligible for PUA if they can either telework with pay or are receiving paid sick days or paid leave.

Assistance for Providers Enrolled in Medicare 

The Centers for Medicare & Medicaid Services (CMS) announced expansion of its accelerated/advance payments program to a broader list of suppliers, including audiologists and SLPs, during the COVID-19 pandemic. This opportunity could help clinicians offset some of the financial impact they are experiencing. 

Non-Federal Assistance Program

Many states, counties, and municipalities have also put financial assistance programs in place to support small businesses, sole proprietorships, independent contractors, and self-employed individuals. Contact your state or local government for additional information on resources and programs

Questions? Please contact federal@asha.org

ASHA Corporate Partners