Last Updated: June 11, 2020
Important Update: The Paycheck Protection Program Flexibility Act (PPPFA or the “Act”) was passed last Friday on June 5th. The Act adds flexibility to PPP and its loan forgiveness component. Please review the updated answers to questions under the Small Business Administration Programs (PPP & EIDL) FAQ section. As of June 2, there’s more than $120 billion still left unallocated. If you have not applied for a PPP loan, we highly encourage you to do so.
Through the Coronavirus Preparedness and Response Supplemental Appropriations Act, Families First Coronavirus Response Act, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, documentary filmmakers impacted by the pandemic can now apply for immediate and short-term federal relief from the US government.
Please note this guide was prepared to give general advice to filmmakers and production companies. It should not substitute for professional advice you may need for your unique situations. New federal guidance is being issued regularly. Information provided on this page may change as the situation evolves.
Where to Apply
Does it need to be paid back?
Individual state’s Unemployment Insurance (UI) Program
Individuals who have lost jobs or furloughed, including gig workers, freelancers and self-employed
Amount set by your state + an additional $600 per week
Small Business Administration (SBA)
Sole proprietor and independent contractors as well as 501(c)(3), 501(c)(19), tribal businesses, any small business structures (C-Corp, S-Corp, B-Corp, LLC, Partnerships) with fewer than 500 employees
250% of your average monthly payroll costs up to $10 million
A private lender that is participating in the PPP
*contingent on spending the loan on authorized costs and retaining employees and wages intact
Small Business Administration (SBA)
Sole proprietor and independent contractors as well as 501(c),(d), 501(c)(19), tribal businesses, any small business structures (C-Corp, S-Corp, B-Corp, LLC, Partnerships) with fewer than 500 employees
Maximum loan is $2 million with the exact amount based on economic injury suffered
*An amount up to $10,000 is a loan advance, aka a “grant.” You cannot use the PPP and EIDL grant for the same expenses. Any amounts greater than the loan advance is a traditional loan and must be paid back.
Unemployment Benefits FAQ
Check out our guide "Navigating US Unemployment Compensation As A Filmmaker" with California, New York, and Illinois state tip sheets.
I have never been eligible for unemployment benefits before because I am a freelancer and all of my income comes from 1099s. Am I now eligible?
Congress has greatly expanded the category of people eligible for unemployment benefits. The fact that you were not eligible before does not necessarily mean that you are not eligible now.
Small Business Administration Programs (PPP & EIDL) FAQ
What is the SBA's definition of a “small business” that qualifies for PPP and EIDL?
Qualifying businesses with 500 or fewer employees or the applicable size standard as assigned in the North American Industry Classification System Codes (page 30, 34, 40, 43). Click here for the SBA size standard calculation tool.
- Tribal business
In addition to the above types of small business, qualifying US residents with self-employment income (such as an independent contractor or a sole proprietor), that have filed or will file a Form 1040 Schedule C, are also eligible to apply.
What expenses do PPP loans cover? *UPDATED ANSWER*
PPP loans cover payroll costs (including salaries, paid sick and medical leave, and insurance premiums; refer to page 10 of SBA-2020-0015 memo for full details) and mortgage, rent and utility payment obligations in effect before February 15, 2020.
How are PPP loans forgivable? *UPDATED ANSWER*
In general, payroll costs paid or incurred and non-payroll costs such as utilities, business rent and mortgage interest payments paid incurred during the covered period are eligible for forgiveness.
To qualify for forgiveness, loan recipients are now only required to spend 60% of the aid on maintaining payroll (refer to page 3, section III, question 3 of SBA-2020-0032 memo for full details), rather than the previous 75% rule. The money that can be spent on operating costs like rent and utilities increased to 40% from 25%.
The period covered is 24 weeks between February 15, 2020 until December 31, 2020 after the loan is made (increased from the 8-week window with June 30th deadline in the original legislation).
After receiving the PPP loan, you need to request loan forgiveness (click here for SBA Form 3508 application with instructions) with your lender within 10 months after the last day of the covered period. Lenders have 60 days to reply to your request.
- If accepted: The lender must request payment from SBA at the time the lender issues its decision to SBA. SBA will remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, within 90 days. If applicable, SBA will deduct EIDL Advance Amounts from the forgiveness amount remitted to the Lender.
- If denied: Borrowers have 30 days to appeal a denial of loan forgiveness.
Forgivable payroll costs are capped at $100,000 on an annualized basis for each employee. As written, and pending further guidance, you must use at least 60% of your total loan amount for payroll costs in order to qualify for forgiveness. This means you can now get up to 40% of the loan forgiven based on what you spend on non-payroll costs, such as rent, mortgage interest, and utilities. This is an increase from 25% in the original act.
To encourage you to rehire your laid-off employees, you will not be penalized for having a reduced payroll at the beginning of the period. However, if you lay off employees and do not rehire them, the loan amount forgiven will be proportionately reduced. If you reduce employee compensation by more than 25% compared to last year, the loan amount forgiven will be proportionately reduced. If you use the PPP loan for costs that are not approved by the bill, those expenses will also not be forgiven.
What are the interest rate and payment terms of PPP loans? *UPDATED ANSWER
The unforgiven portion of any PPP loan carries a 1% fixed interest rate with a 2-year repayment term after a 6 months deferral. Following the June 5th legislation, the loan term will move from being a two-year loan to a five-year loan for any new loans. If you already have a PPP loan, you can work with your lender to mutually agree to modify the term to 5 years. This is relevant for you if you expect, even with the new provisions, that you will not get the entire loan forgiven.
Is there a fee applying for PPP loans?
No, there is no SBA or agent fee. However, some banks may require you to be an existing customer or to have a certain type of product with them.
Will I be taxed on the PPP loan amount?
The loan forgiveness amount will not count as taxable income.
How do I calculate the maximum amount I can borrow through PPP?
The 100% government-backed loan amount will equal 250% your average monthly payroll, up to $10 million cap.
Small businesses: Refer to page 8 of SBA's "SBA Docket No. SBA-2020-0015" memo for the calculation methodology.
Self-employed individuals: Refer to page 6 of SBA's "Additional Eligibility Criteria and Requirements for Certain Pledges of Loans" memo for the calculation methodology.
What information will I need for PPP loan applications?
Small businesses: SBA requires Form 941 and Form 940, evidence of business rent, mortgage interest payments, or utility payments with the loan application. Each lender may require additional documents. We recommend that you have something to document that you were operating prior to February 15, 2020 such as a profit / loss statement for 2019 and the first two months of 2020, and incorporation documents for corporations, LLC’s or partnerships.
Self-employed individuals: Individuals with self-employment income must provide the 2019 Form 1040 Schedule C and Form 1099-MISC with your PPP loan application. If you have not yet filed 2019 taxes, you still need to complete and submit both forms. You must also provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020.
Click here for PPP Borrower Application Form.
Click here for PPP Sample Application Form.
What if my business is seasonal and was dormant or not fully operating as of February 15, 2020? Can I still apply for PPP loans?
Yes, seasonal businesses are also eligible for PPP loans under new rule (TREAS-DO-2020-0009) released by the Department of Treasury. The alternative eligibility period in calculating your maximum loan amount is any 8-week period between May 1, 2019 and September 15, 2019.
I’m self-employed (independent contractor or sole proprietor) and I already filed for a PPP loan with a lender without Form 1040 and Form 1099-MISC. What do I do?
You should consult the lender where you applied.
What expenses does an EIDL cover?
EIDL may be used to pay fixed debts (rent, etc), payroll, accounts payable, workers’ paid leave and other business operational needs that can’t be paid because of the disaster’s impact.
Dividends and bonuses, disbursements to owners, expansion of facilities or acquisition of fixed assets, repair or replacement of physical damages, payments to pre-existing debt, payments to other federal(including SBA) or small business investment company (SBIC) loans are not eligible expenses under the EIDL. For the full list of ineligible uses, click here (page 75).
How is an EIDL forgivable?
Only the loan advance up to $10,000 is forgivable. The actual amount is determined by the size of your small business.
What are the interest rate and payment terms of an EIDL?
The interest rate is 3.75% for small businesses. The interest rate for non- profits is 2.75%.SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
Is there a fee applying for an EIDL?
No, there is no cost to apply.
Do I have to take the EIDL if offered?
No, there is no obligation to take the loan.
What information will I need for EIDL applications?
Basic information includes gross revenues, cost of goods sold, lost rents (for rental property owners), operating expenses, other reimbursement received (i.e. business interruption insurance), and the number of employees during the 12 months period prior to Jan 31, 2020. Click here for the online EIDL application.
SBA requires a completed application upfront. If your application is incomplete, it will be set aside. You will be notified what is missing, but you will fall back in the queue after submitting supplemental materials.
Other information that may be requested by SBA for an EIDL include:
- SBA Loan Application (SBA Form 5 or 5C)
- Personal Financial Statement (SBA Form 413)
- Schedule of Liabilities (SBA Form 2202)
- Tax Information Authorization (IRS Form 4506T)
- Federal income tax returns (with schedules) for principals, general partners or managing member, and affiliates for 3 years
- If the most recent Federal Income Tax Return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year
- A current year-to-date profit-and-loss statement
- Additional Filing Requirements (SBA Form 1368) providing monthly sales figures.
What if I'm rejected for an EIDL?
You have six months to provide new information and submit a written request for reconsideration.
Can I change an EIDL amount after acceptance?
If more funds are needed, applicants can submit supporting documents and a request for an increase. If less funds are needed, applicants can request a reduction in the loan amount.
Can I apply for both a PPP loan and EIDL?
Yes, you may apply for both a PPP loan and an EIDL. If you do apply for both and receive the EIDL grant up to $10,000 first, it should cover costs outside of PPP expenses (payroll costs, utilities, rent, and mortgage payments) to avoid the reduction of PPP loan forgiveness.
When can I apply for SBA loan programs?
SBA lenders and SBA have resumed processing PPP loans and EIDL applications. They are prioritizing those who have already submitted an application before accepting new ones. You should apply as soon as possible.
How long do I need to have been in business in order to qualify for SBA programs?
You need to have been in operation prior to February 15, 2020.
How do you estimate the loss of revenue from planned projects?
The PPP program is based upon your payroll, not your lost revenue. The EIDL specifically addresses loss of revenue. If you apply for an EIDL, you will need to work with the SBA in underwriting your loan.
My revenue varies greatly from one month to the next and one year to the next. How do I calculate the average monthly payroll?
You add the payroll for each of the last 12 months then divide by 12.
If I want to make sure that I don’t have to pay the government back for either EIDL or PPP, what conditions do I need to meet? Are they different for the two programs?
EIDL is a traditional loan program with an “advance” up to $10,000 that does not have to be repaid and certain payroll tax credit benefits that must be repaid. PPP is an unconventional loan program with loan forgiveness for certain covered expenses. If you apply for both, make sure you do not use the loans for the same purpose.
Will payroll for part-time employees or new hires be forgiven? *UPDATED ANSWER*
Payroll paid between February 15 and December 31, 2020 is eligible for forgiveness.
How do I decide which bank to apply for PPP loans? If I’m stuck in a queue with one bank, can I start up an application through another one?
You can search for a participating bank near you on the SBA website. Or you can consult this website, which is updating participating banks and their requirements regularly as the program rolls out. Lenders with two asterisks are currently welcoming applications from non-customers. You should ask your banker about submitting more than one application.
Will the funds run out? *UPDATED ANSWER*
The second round of Congressional funding for PPP loans started on April 27, 2020. As of June 2nd, "there’s more than $120 billion still left unallocated for small businesses." The April 27th (2nd) round of funding has some guardrails in place aimed to prevent excessive concentration of the funds in a small number of lenders and businesses. For example, the fund allocates $60B for community banks, credit unions, minority depository institutions (MDIs), Community Development Financial Institutions (CDFIs), microlenders, and certified development companies (CDCs). If you have not had success with your existing bank, you may want to work with one of the above types of lenders.
Can residents of Puerto Rico receive funding?
How can I find more information from the SBA?
FAQ Specific to Single-person Entities
I am the owner of my business. My income comes both from payroll I run for myself, as well as from quarterly distributions. What can I count as my income?
You should work with your banker to determine the correct amount.
How do I determine if I’m considered a sole proprietor or an independent contractor?
There is no clear distinction as the terms are often used together. Often a sole proprietor may receive his or her income through 1099 payments.
I do a mix of W-2 and 1099 work. I file taxes as an individual, not as a business. Can I file for SBA programs in addition to unemployment benefits?
You can apply for unemployment for your W2 wages and an SBA loan for your 1099 work. However, you can only collect once so total payments should not exceed your average income.
How do I decide if I should apply for unemployment benefits or for SBA programs?
You should consult your advisors such as your accountants and lawyers.
FAQ Specific to Multiple-person Entities
Can company principals be included in the employee count for payroll protection?
I have an LLC, but I am the only W-2 employee of it. Everyone that I hire (crew, editors, associate producers), I pay as independent contractors on 1099s. Am I filing for PPP for just my own payroll costs, or should I include my contractors as well?
You would apply only for your own payroll costs.
Because filmmakers often have multiple LLCs, LLPs, Corporations etc. built around their films, how does that affect how we would apply?
Each LLC should apply separately for its own payroll costs.
Can we apply if we use a payroll company?
Common Filmmaker Scenarios
I received grant money in 2019. Should that be considered 1099 income?
You should consult with your accountant and the foundation or organization that made the grant for guidance.
I’m a permanent resident who may want to apply for citizenship. Does receiving funds from any of these programs impact being denied citizenship based on Public Charge Grounds?
You should consult your immigration attorney.
For undocumented people who are self-employed, independent contractors via their own LLC, are they eligible for the small business provisions of the stimulus package even if the person has no DACA/SSN?
Undocumented people are typically not eligible for SBA programs. You should contact your advisors.
You can learn about other government benefits (including food security benefits and stimulus checks) that are available to individuals with varying levels of documentation in this PowerPoint by the National Immigration Law Center.
My company is operating at a negative balance (no income yet). Can I still qualify for relief?
Yes, if you were making payroll payments.
I have a single-member LLC. I signed a documentary distribution deal, eligible for obvious but unprovable loss of income. An example is anticipated but unprovable loss of income from spring education distribution aimed at universities.
PPP is not designed for loss of income but to replace payroll expenses and certain other fixed costs. If applying for an EIDL, you will need to work with the SBA in underwriting your loan.
I have a single-member LLC, which brings in around $50,000/year from renting gear to productions. Am I able to apply for the SBA PPP loan? *UPDATED ANSWER*
You are eligible for PPP if you have payroll expenses. If you only paid yourself via an annual distribution, aka “owner’s draw,” you should consult your local banker. Some banks have reportedly been encouraging applicants to include owner’s draw in their total income, while others have suggested not doing so. It seems that this is up to the bank’s discretion.
Is a tiny incorporated production company or its sole employee/owner eligible for government relief even if the company is still receiving client checks for work completed before the COVID shutdown?
You are eligible if your business has been impacted by the shutdown. If you have money that was earned before but are not completing new jobs, you are also eligible.
I have a fiscal sponsor, am I eligible for any of these programs?
If your fiscal sponsor practices a “Model C” regranting model of fiscal sponsorship (most arts and media fiscal sponsors including IDA, Women Make Movies, IFP, Film Independent, Southern Documentary Fund, The Film Collaborative and Fractured Atlas are “Model C”) you are an independent entity and may apply on your own if you otherwise qualify.
If your fiscal sponsor practices a “Model A” direct project model of fiscal sponsorship (less common for film and media projects) where they pay your staff directly, manage your payroll or are the employer of record for project expenses, you are likely not eligible to apply on your own. Discuss your situation with your fiscal sponsor.
Additional Resources *UPDATED*
PPP resources from the Department of Treasury Read More
NEW! Fiscal Management Associates (FMA PPP) Toolbox, excellent guides for both small businesses and freelancers, along with links for free daily webinars on PPP forgiveness
NEW! SBA-2020-0032 provides Interim Final Rule on Paycheck Protection Program requirements and loan forgiveness processes Read More
NEW! American Business Bank’s PPP Forgiveness FAQ Library Download PDF
Applying for SBA Disaster Loans (EIDL) Presentation from SBA West Virginia Office View PDF
F.A.Q. on Coronavirus Relief for Small Businesses, Freelancers and More from the New York Times Read More
SBA PPP Overview from Cornerstone Government Affairs Read Memo
SBA COVID-I and COVID-II small business loan programs overview from Cornerstone Government Affairs Read More
Smart Asset's updated list on participating lenders and their individual application requirements. *TIP* Lenders with two asterisks are currently welcoming applications from non-customers.
Radius Bank (Online bank and SBA-approved lender, preferred queue through Cornerstone Government Affairs)
Resources for Undocumented Immigrants
National Immigration Law Center FAQ: Understanding the Impact of Key Provisions of COVID-19 Relief Bills on Immigrant Communities READ MORE
National Immigration Law Center webinar from 4/16/20: Equal Opportunities to Thrive: Covering Rebates, Tax/SSN/ITIN, Food Security & Access to Food Programs. View Powerpoint
FAQ for Immigrant-Owned Worker Cooperative Businesses on Federal Coronavirus Funding Options READ MORE
InformedImmigrant.com State-Level Directory for Resources for Immigrants during the coronavirus crisis READ MORE
COVID-19 Resources for Undocumented Communities (organized by state) READ MORE
Fact Sheet on Eligibility for Unemployment Benefits During COVID-19, National Employment Law Project READ MORE
Access COVID-19 Support as a DACA Recipient or as an Undocumented Immigrant from Immigrants Rising read more