If you’re one of the millions of people in the U.S. who work for themselves, and you’re not getting enough work because of the pandemic, relief money is available. At least, it’s supposed to be.
Unemployment benefits were extended to you (whether you call yourself self-employed, freelancer, sole proprietor, independent contractor, or gig worker) as part of the $2.2 trillion coronavirus relief package. Here’s a thorough explainer about how Pandemic Unemployment Assistance (PUA) and Federal Pandemic Unemployment Compensation (FPUC) are supposed to work.
You’re also supposedly eligible for the Paycheck Protection Program (PPP) and the Covid-19 Economic Injury Disaster Loan Program (EIDL), two federal programs outlined here. But the self-employed haven’t had much luck receiving these new benefits. The SBA’s PPP loans, which are distributed by banks, already are spent. Grants and loans from Covid-19 EIDL, another SBA program, also have dried up.
If and when can you expect anything?
Rafael Espinal, head of Freelancers Union, an advocacy group with roughly 500,000 members, hasn’t heard of any members who have received unemployment benefits since the legislation was passed. “For the first time in history, freelancers can qualify for unemployment insurance, but I can’t point to one freelancer who can say they’ve received their first unemployment check,” he says.
Katie Vlietstra, vice president for government relations and public affairs for the National Association for the Self-Employed, a group with roughly 175,000 members, says many individuals who haven’t been able to get support have been closing their businesses. “This is a demographic that is under-represented and under-reported,” says Bridget Weston, the acting chief executive officer of SCORE, a nonprofit with more than 300,000 clients and 10,000 volunteer mentors. She urges additional support and resources.
This state of limbo poses problems both for vulnerable individuals who are trying to put food on the table and for the economy’s recovery prospects. Last year, 56.7 million Americans freelanced, according to Freelancers Union. “A popular image of the gig economy, as a realm of Uber drivers and TaskRabbit contractors, misses a broader trend,” Bloomberg News explained in this revealing article. “Companies in recent decades have increasingly turned to consultants, contractors and temporary workers for everything from maintenance and janitorial work to logistics or human-resources management.”
The crisis is a “huge reminder” that our safety-nets are not set up for the workforce changes that are underway, says Vlietstra. Millions of self-employed all face the same challenge: getting cash flow and good information, as programs change in real time.
Espinal, Vlietstra, and Weston, share some tips for what to do while waiting for benefits.
1. Acknowledge and take steps to control the anxiety you’re feeling.
Free help is available. Try calling your local Small Business Development Center office for counseling. Consider getting a mentor through SCORE. You can be paired with one or more mentors and speak with them on the phone or by video, says Weston. Since the virus broke out in the U.S., new requests for mentors are up from 20% to 30%. The nonprofit tries to respond to each new request within 48 hours.
2. Research your state’s unemployment benefit requirements/guidelines.
“Each state’s unemployment office has its own way of doing things,” says Espinal. At the same time, “each office is scrambling to implement federal guidelines they received less than a week ago.” Scour your state’s website for updates. Massachusetts, for example, recently announced that self-employed individuals will be able to file PUA claims on or around April 30.
3. Don’t give up on PPP.
PPP launched on April 3, but self-employed applicants couldn’t apply until April 10. “To me, it seemed the process was rigged in favor of much larger small businesses that had resources to get in,” says Espinal. The program is out of money and has stopped accepting applications for now. Additional money should be available when Congress agrees. SCORE mentors can help you get your documentation in order so that you’re ready to go when that happens, Weston says. Also: Research what PayPal, QuickBooks, and Intuit are doing related to PPP, says Vlietstra.
4. Don’t give up on EIDL.
A lot of self-employed individuals tried to get a grant of up to $10,000, says Vlietstra. Frustration mounted as that program ran slowly, and then the SBA made the “unilateral decision” to limit the amount to $1,000 per employee, she says. “If you’re self-employed, $1,000 isn’t long-term.” EIDL is out of money and has stopped accepting applications, for now. The traditional part of EIDL, the low-interest 30-year loan of up to $2 million, is worth keeping in mind.
5. Do anything to stay solvent.
Ask for strategies from mentors on cutting business expenses, negotiating with landlords, and talking with insurers, says Weston. She also suggests learning about the tax implications of losses. Someone who can act as a regular sounding board can be invaluable, she says, noting that studies suggest that business owners that talk to mentors are more likely to increase revenue. SCORE mentors are free, and you can come back as many times as you need, Weston says.
6. Seek relief grants from nonprofits and businesses.
Freelancers Union started collecting donations from individuals and businesses and launched its first relief fund in March. It grants up to $1,000 to freelancers it determines are under financial duress. Espinal says 100% of the donations go to the grantees. Applications are temporarily closed because of overwhelming demand. Don’t expect miracles, says Vlietstra. “Major businesses have been announcing these small business funds but some haven’t even started accepting applications.” (We compiled a partial list of loan and grant programs.)
7. Advocate for yourself and for others.
“Channel your energy into pushing states to hurry up and get systems in order and the federal government to replenish the PPP,” Espinal says. “Push for a separate mechanism” for deploying federal funds dedicated to the self-employed who don’t fit banks’ criteria, says Vlietstra. Those with checking accounts and 1099 forms and other reasonable documentation should be able to access loans at the same rates as businesses with multiple employees, she suggests. One other suggestion: “Screaming doesn’t help; I’ve tried that.”