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Whether you're a sole proprietor or a small business owner, you might be looking into getting an SBA loan through the Paycheck Protection Program.
However, you might be having issues hearing back from a PPP lender, or wonder how Unemployment Insurance or Pandemic Unemployment Assistance affects your eligibility for a loan. Here are three answers to three common questions we've seen in our Mutual Aid Google Group:
You can apply for a loan through multiple lenders at once.
According to Bench, you can simultaneously apply for the same PPP loan through a few different lenders — you can even hear back from your bank and still apply somewhere else, just to be safe. You just have to make sure you only get the actual loan through one lender, unless you have multiple businesses with different tax IDs.
Smaller or less traditional lenders might be more helpful than your bank.
Users in the Mutual Aid Circle have cited success with lenders such as Fundera, Lendio, and Blue Vine. Part of the reason is that smaller lenders have more experience working with small or local businesses in the first place. That being said, you should still apply as quickly as you can just like you would at a regular bank — the program ran out of money a few weeks ago before getting more funding, and it's likely to run out again.
You can't collect money from a PPP loan and unemployment benefits at the same time.
As Lawyers for the Creative Arts points out, there isn't much guidance from the state or federal government on what to do, but it's important to remember that each program serves a different purpose. Unemployment benefits are meant for people who have recently lost work due to COVID-19, whereas the SBA loans from the Paycheck Protection Program are designed to help you keep your employees (aka yourself) on payroll. You cannot use a PPP loan for payments to yourself from your own business while also collecting unemployment benefits because you're out of work.
However, when your PPP funds run out after eight weeks, you may still be eligible for unemployment benefits. You can also apply for both at the same time, but if you get a PPP loan, you will have to opt out of unemployment benefits for those eight weeks.
As many people in the Mutual Aid Circle pointed out, it's worth weighing out which option might be better for you, especially if you're a self-employed worker or sole proprietor. For instance, a PPP loan is still a loan — there are ways to turn it into a grant, but if you'd rather avoid those steps, collecting unemployment might be a simpler option.
If you have any more questions (or have experience in successfully applying for a PPP loan), feel free to join the group and add to the discussion.