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Published August 6 2020 updated August 6 2020 2 minutes 12 seconds reading time.
Summary at a Glance
When you read all the different disaster resources available to you most will select the easiest application process over what is mathematically better for you. Do you think EIDL debt that has to be repaid with interest is better than PPP loans?

Dear Math Challenged Independent Contractors / Disaster Victims.

When you are reviewing your options of what SBA path to take to increase your disaster debt always keep in mind your income needs and long term survival needs.

  1. Pandemic Unemployment Assistance

    1. $600 per week retroactive to about April 4, 2020 . If you have paid into the UI or worked for a company under a W2 within the last decade you'll most likely be awarded an additional amount.

  2. Paycheck Protection Program calculated from line 31 of your 1040 Schedule C filings.
    Your math is as follows.

    1. Take your 2019 1040 Schedule C line 31 net profit amount from your filed or not filed tax returns. If the amount is over $100,000 then reduce the amount to $100,000 which is the maximum allowable.

    2. Divide amount from (a) by 12 to get your average monthly net profit.

    3. Multiply your average monthly net profit by 2.5

    4. FYI: Your EIDL Advance will be reducing the PPP loan forgiveness in the same amount. It's a duplication of benefits when calculating PPP forgiveness so avoid overspending.

PPP Example: Let's say your 2019 taxes on line 31 shows $60,000 as your net profit for last year.

  1. $60,000

  2. $60,000 / 12 = $5,000

  3. $5,000 * 2.5 = $12,500

  4. $0.00 ( No EIDL Advance)

  5. $12,500 to pay 8 to 24 weeks of payroll.

PUA instead of PPP to start could offer more for a longer period of time for Independent contractors.

PUA: $600 * 15 weeks = $9,000

PPP: $520 * 24 weeks = $12,500 (example number)

Realistic numbers would be less 2 to 3 weeks if you applied end of June for the PPP loan.

As of today your EIDL application date is based on funds in the US Treasury or Dec. 31, 2020.

You would need to apply for the EIDL anytime between August and September and delay your loan signing until your PPP funds were nearly completed or before the US Treasury exhausts all funding.

The goal for Independent contractors would be to start with repayment free assistance first before looking for a 30 year term loan.

For many of you this method may not work or may in part help. If you can reduce your debt burden caused by the disaster with disaster assistance you will have a better chance of survival this year. Then we'll see what 2021 has planned for us all.

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