APRIL 2020: U.S. photographers may find financial relief through the CARES Act. Learn if you’re eligible and how to apply, then share the good news with your community! UPDATED: April 27, 2020–the second wave of Paycheck Protection Loans are available now. The application form is valid through September 30, 2020.The Small Business Association has published a new FAQ document, which you can download HERE. To learn how to apply for a loan, visit the SBA website.
Why should photographers care about the CARES Act?
A virus brought the planet to a jarring halt. There’s a lot of talk about the “new normal,” as if this situation fits any plausible definition of normalcy. This is not normal – it’s a collective pause. And pressing pause can be a good thing; we’re pressing pause to keep hospitals and health systems running. We’re pausing to protect our communities.
The Power of the Pause
Pausing everything now – surrounded by bottles of hand sanitizer and dwindling toilet paper rolls – means we can pick up where we left off, when we push this virus into history books.
In the meantime, though, pausing comes at a price. Photographers are hurting, grieving what’s lost. There’s no better way to say it: small businesses around the world are burdened by grief.
“A week ago I felt like I drew a ‘move back ten spaces card’ in this little game of life. I am sure many of us feel that way,” shares Jenn Linke of The Decisive Moment and Art of Life Photography.
This week, some signs of hope appeared.
The CARES Act
The U.S. Congress just passed a groundbreaking $2 trillion stimulus package called the CARES Act. The bill allocated $350 billion specifically to assist small businesses – like yours. The key takeaway is you can access capital to keep your business running. This matters for photographers because it offers financial relief for small businesses based in the United States. The SBA is posting information for small business owners here.
This is an unprecedented lifeline for your photography business. But act soon! You’ve got until June 30, 2020 to apply.
As of late April, the U.S. Congress committed to releasing Phase 4 of the COVID-19 relief program. In this excellent video update, the Professional Photographers of America’s CEO and CFO answer questions about how the EIDL and PPP loans can help photographers.
The CARES Act is a ray of hope photographers need right now. It bolsters the Small Business Administration’s loan program to help small businesses cover the costs of payroll and operational costs. The Paycheck Protection Program (PPP) is especially vital for photography business owners at this moment.
#ShootProofPRO Tip: Know Your Programs
The paycheck protection program is in addition to SBA economic disaster loans and two programs passed earlier this month to help businesses with expenses related to paid sick leave and family leave.
The key difference between the programs is that PPP loans are completely forgivable if your business meets specific requirements. EIDL loans–except for an initial $10,000 grant–are not forgivable. Plus, the cap for PPP loans is considerably higher at $10 million per organization. EIDL loans cap out at $2 million.
Here’s some new information about Economic Injury Disaster Loans (EIDL). The SBA confirms that the grant portion of the EIDL will be paid out at $1,000 per employee up to a maximum of $10,000. There is no word yet on how this impacts sole proprietors or single-owner businesses that don’t have employees. According to the SBA’s email, no grants (advances) will be distributed until a business submits a full EIDL application. Filling out the initial online application DOES NOT qualify you for an EIDL grant/advance. You must also apply for the full EIDL loan to receive the grant/advance.
The best part? These loans are guaranteed by the federal government – not by businesses or individuals. As long as funds are used on eligible expenses and specific criteria are met, the loan can be forgiven. (Translation, it’s like a gift from Uncle Sam, with some caveats listed below.)
Get ready to apply for a paycheck protection loan.
To underscore the power of relief, small businesses are eligible for a loan equal to 2.5 times their average monthly payroll costs for the previous 12 months. The maximum loan amount is $10 million – a mind-boggling number! Plus, there are no loan fees, and the maximum interest rate is 4%. There’s also a “forgiveness feature,” for businesses that meet specific criteria.
How can photographers use the funds?
- Payroll costs (for W2s and 1099s) – including payroll tax, sick leave, health insurance premiums, and retirement benefit. However, payroll costs do not include compensation of an employee in excess of $100,000 per year (prorated for February 15 – June 30, 2020).
- Mortgage interest
- Other debt interest originating before February 15, 2020
- Rent and utilities
Is your photography business eligible? Yes, if your business…
- Was operational before February 15, 2020
- Has 500 employees or less (basically EVERY photo business!)
- Is comprised of you – a self-employed individual
- Is a nonprofit with fewer than 500 employees
When can photographers apply for these loans?
- Starting April 3 small businesses and sole proprietors can apply
- Starting April 10 independent contractors and self-employed photographers can apply
Get a head-start by doing your homework:
- Gather your 2018 and 2019 business tax returns
- Compile recent payroll tax info – Form 941
- Connect with an SBA-approved lender (bank)
- Document the number of employees and payroll your business had over the last year
- Prepare to sign a certification that your business has been affected by COVID-19 and that funds will be used to keep employees and fulfill debt obligations
- Reach out to your attorney and your CPA (ShootProof loves sharing tips, but we can’t give legal or financial advice.)
What’s the deal with “Loan Forgiveness?”
Under the CARES Act, small business owners like photographers can apply for a Paycheck Protection Plan (PPP). The PPP is designed to incentivize small businesses – like photography businesses – to keep employees on payroll.
Each small business can apply for a loan of up to $10 million to cover costs like payroll, health care benefits, commissions or similar compensation, rent, and utilities. Even though debt forgiveness is usually taxed as income, it’s tax-free under the CARES Act.
#ShootProofPRO Tip: Know the Rules
Get cash to support your business that you don’t have to pay back as long as you maintain your payroll during the crisis or restore payroll afterward. Here’s the U.S. Chamber of Commerce’s complete guide to federal programs and aid for small business coronavirus assistance.
The Professional Photographers of America published a guide for photographers and are updating it regularly. You’ll find details about the federal relief packages and how to apply for benefits.
There are some strings attached, of course.
- You’ll have to keep employees on payroll for eight weeks.
- The amount forgiven will be the amount you spend on the expenses listed in the CARES Act’s “Use of Funds” clause.
- You’ll need to prove that your business met all the criteria during the 8-week timeframe – keep records!
But wait, there’s more…
If you need MORE help, consider an Economic Injury Disaster Loan (EIDL). This loan is designed as federal assistance for the repair and rebuilding of private sector disaster losses. The EIDL provides up to $2 million to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of a declared disaster, regardless of whether the applicant sustained physical damage.
One caveat…except for an initial $10,000 grant, you have to pay back this loan. You can apply for both a PPP loan and an EIDL; however, the loans cannot be for the same purpose.
Stay home, stay hopeful.
“I encourage all photographers to focus their energy on the present. Stay home and savor the time. Update your website, blog the beautiful art you created but never had time to share, document your experience, and seek beauty in the chaos,” says Melissa Lane-Isaksson, founder of Unraveled Academy.
“And for all of the photographers who themselves are also first responders or are home trying to make it all work while their partners are out there keeping us all afloat – truck drivers, grocery store employees, doctors, nurses, teachers trying to support their students, non-profit workers – too many to name… THANK YOU! There aren’t enough words in the world to express our gratitude to you.”
Written by RACHEL LACOUR NIESEN