Navigating the CARES Act For Creatives
The President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) on March 27, and details are starting to emerge about different aid and loan programs included in this bill. There is an overwhelming amount of information emerging about this bill, and you may be wondering which programs apply to you as an artist or creative business owner. We’re here to help summarize this bill and guide you through.
Please realize that most of this information is brand new, and new details are emerging daily. If you have specific questions about any of these programs, our best advice is to contact the primary sources linked below.
CARES Act Key Takeaways
Households will receive direct payments through the government. Most households will receive $1,200 per adult and $500 per child in the coming weeks.
Small businesses, non-profits, sole proprietors and independent contractors with fewer than 500 employees will have access to small business loans. Loans can be forgiven if businesses can maintain their current staffing levels.
Unemployment benefits have been expanded under Pandemic Unemployment Assistance. This includes an additional $600 per week over the next four months for people who lose their jobs due to COVID-19. Also, for the first time, self-employed workers, freelancers, and gig economy workers will be able to access these benefits.
All taxpayers can deduct up to $300 of their charitable giving in 2020. This applies regardless of whether a taxpayer itemizes deductions or takes the standard deduction.
Here are resources to explore and actions to take for different employment scenarios:
Individuals
Economic Impact Payments (Direct Payments)
Eligibility: Each U.S. resident or citizen will receive up to $1,200 and an additional $500 for every child.
Special considerations: This amount will be reduced for higher-income taxpayers and begin phasing out after $75,000 in adjusted gross income for a single taxpayer, $112,500 for a head of household filer, and $150,000 for married couples who file a joint return.
Action Needed: For most individuals, no action is required since the IRS will use a taxpayer’s 2019 tax return, or, if not filed, their 2018 tax return. Payments will be distributed automatically beginning in mid-April, although some seniors and others who typically do not file returns will need to submit a simple tax return to receive the stimulus payment.
More Info: Read more from the IRS.
Expanded Unemployment Benefits (Pandemic Unemployment Assistance)
Eligibility: This provides emergency unemployment assistance to workers left out of the regular state unemployment insurance or who have exhausted their state unemployment benefits. A “Covered Individual” is eligible for up to 39 weeks (including any weeks for which the individual received regular unemployment benefits). A “Covered Individual” is an individual who (i) is not otherwise eligible for regular or unemployment compensation; (ii) provides self-certification that the individual is unemployed, or partially unemployed, for various reasons related to COVID-19. Eligibility is expanded to self-employed, part time workers who are unable to work due to COVID-19, and those with limited work history.
Special considerations: Emergency Increase to Unemployment Compensation (Pandemic Unemployment Compensation or PUC)- Individuals eligible for state unemployment benefits or PUA are eligible for an extra $600 per week for up to four months.
Action Needed: Unemployment claims must be filed through the Colorado Department of Labor and Unemployment. Standard unemployment claims (from W-2 employers/income) are currently being accepted. Pandemic Unemployment Assistance claims are not yet open, but should be soon.
More info: Check the Colorado Department of Labor and Unemployment site for the latest details.
Small Businesses and Nonprofits (Fewer than 500 Employees)
Paycheck Protection Program
Eligibility: The Paycheck Protection Program (PPP), provides SBA 7(a) loans of up to $10 million to non-profits and small businesses with less than 500 employees. Independent contractors and self-employed individuals can also apply. Small businesses and nonprofits can apply starting April 3. Independent contractors and self-employed individuals can apply stating April 10. The size of the loan is the lesser of (1) a business’ average monthly “payroll costs” for the prior 12 months times 2.5 or (2) $10 million.
Special Considerations: The loan is for expenses incurred between February 15, 2020 and June 30, 2020 for payroll costs, health benefits during sick or family leave, salaries or commissions, interest on mortgage, rent, utilities and prior debt. Businesses are eligible to have these loans forgiven, effectively turning the loans into grants. Forgiveness is available for the portion of the loan used for the following expenses during the covered period (8 weeks from origination): payroll expenses, mortgage interest, rent, utilities, and prior debt.
Action Needed: Businesses can apply at any SBA-approved lender, who will be responsible for distributing these loans. If you already work with a bank that is an SBA-approved lender, we recommend contacting them first. You can also call your local chapter of the Small Business Development Center for guidance. When in doubt, file for relief and let SBA decide if you qualify. There is no penalty for submitting an application, and applying early is recommended, as there is a funding cap for this assistance.
More info: Colorado SBDC COVID Response Center
Find an SBA Eligible Lender
Emergency Economic Injury Disaster Loans (EIDL) and Grant
Eligibility: Most small businesses including Sole Proprietors, Partnerships, LLC, Corporation, Joint Venture, Association, Trust, Cooperative, small agricultural cooperative, aquaculture, and most private non-profits are eligible if they are directly affected by COVID-19 and have suffered or are likely to suffer substantial economic injury. Eligible entities may qualify for loans up to $2 million. The interest rates for this disaster are 3.75 percent for small businesses and 2.75 percent for nonprofit organizations with terms up to 30 years.
Special considerations: This program establishes an emergency grant to allow an eligible business or nonprofit that has applied for an EIDL loan due to COVID-19 to request an advance on that loan, up to $10,000, which the SBA must distribute within 3 days. Applicants are not required to repay advance payments, even if denied for an EIDL loan, but advanced payments would be counted towards the loan forgiveness amount under a 7(a) PPP loan.
Action Needed: Review this checklist of materials needed to apply for an EIDL loan, and complete SBA Form 5 to apply.
More Info: Colorado SBDC COVID Response Center
You can request free one-on-one consulting with East Colorado SBDC for questions about applying for an SBA loan or any other business guidance.
General Guidelines
These are just a few of many aid programs being rolled out at federal and state levels. Details are still emerging and changing on a daily basis. If you think you may apply for unemployment benefits or an SBA loan, we recommend taking the following steps:
Keep documentation of any scheduled creative work you’ve had cancelled or postponed due to the coronavirus. This could include past or future performances, client contracts, events, commissions, hourly work-for-hire, etc. Documentation of lost income will likely be helpful when applying for aid.
When in doubt, apply for aid early. We expect long cue lines and high demand for these programs, and submitting applications early may help you receive aid sooner.
Continue exploring additional local and state resources including artist relief funds, grants, and fundraisers. We’ll do our best to keep our COVID-19 Resource Page updated with new opportunities.
There are many organizations distributing information right now, but for the most accurate and up-to-date info on SBA loans, we recommend checking directly with the Colorado SBDC Covid Response page. This page is regularly updated with information from the SBA and the Colorado Governor’s Office.
Questions or comments? Send us an email, and we’ll do our best to get you connected with the most helpful resource.