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Home » Articles » Tax Help » COVID-19: Solvable’s Guide for Business Owners & Independent Contractors
COVID-19: Solvable’s Guide for Business Owners & Independent Contractors
At Solvable, we care about your financial well-being and are here to help. Our research, articles and ratings, and assessments are based strict editorial integrity. Our company gets compensated by partners who appear on our website. Here is how we get compensated.
At Solvable, we care about your financial well-being and are here to help. Our research, articles and ratings, and assessments are based strict editorial integrity. Our company gets compensated by partners who appear on our website. Here is
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We will be updating this page weekly with new information and resources to help freelancers & business owners get through this time. Check back for more information or reach out to us if you have a specific question.
You Can Get Support in Time of COVID-19
Nearly everyone is facing some sort of hardship during the COVID-19 pandemic. Those on the front lines, such as healthcare workers, may be quarantined from their families to avoid transmitting the virus. Small businesses have closed. Independent contractors have lost anchor clients. Entire industries have shut down.
The government has stepped in with a financial aid package, the Coronavirus Aid, Relief and Economic Security (CARES) Act. The $2 trillion package is designed to help small and large businesses, as well as independent contractors and individual taxpayers.
Take a look at our COVID-19 Financial Relief Guide to see what programs can help you through the upcoming economic speed bumps.
The IRS has strict regulations determining whether a worker is a 1099 independent contractor (freelancer) or an employee. Under normal circumstances, employees have withholding taxes deducted from their paychecks, and are entitled to certain benefits, including unemployment insurance if they are laid off.
Just like individual taxpayers, freelancers may be able to borrow from their IRA without tax penalties and may qualify for student loan deferral. Independent contractors may also qualify for the direct-deposit tax credit individual taxpayers will receive, and the above-the-line deduction for charitable contributions.
Unemployment Insurance for Freelancers
Under the CARES Act, independent contractors may now be eligible to collect unemployment insurance if their income has dropped substantially as a result of COVID-19. For instance, an Uber driver who can no longer work may be able to file for unemployment.
Just like employees, gig workers may receive up to $600 weekly from the federal government, plus whatever amount is determined by the unemployment department in the worker’s state.
Extension for Quarterly Tax Payments
The April 15 deadline for estimated quarterly tax payments has been extended to October 15, 2020, making all estimated payments (including those for April and July) due on that date with a single payment.
Freelancers May Qualify for Small Business Administration (SBA) Loans
The “Paycheck Protection Program” that is part of the CARES Act makes SBA loans available to self-employed individuals as well as small businesses. These loans can fund payroll, healthcare benefits, rent, utilities, and other operating costs at interest rates below 4%. Loan terms are up to 10 years.
Newest Updates
The IRS announced they are extending the 2020 tax deadline to July 15.
The “Coronavirus Bill” being passed through Congress includes measures to help various sectors of society, including a clause that would help independent contractors and gig economy workers take advantage of unemployment benefits. If the bill passes, it would allow workers to get an additional $600/week.
If you’re self-employed or a small business owner you could qualify for the Paycheck Protection Program, aimed at helping those whose business’ are affected by the COVID crisis.
Setting up a GoFundMe is a great way to get your community involved and get support through this difficult time. Loyal patrons of your business will be eager to donate, share your message and lift you up while business is slow.
The Small Business Administration has just announced disaster relief lending to help make businesses more resilient during these times. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; 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. Please visit the following SBA links for more detailed information:
Disclaimer: Solvable is not your CPA. We don’t know your particular situation. The information we’re sharing in this article is just information, not individual advice. Don’t act on anything without working with your CPA or other professional first.
Solvable is a for-profit company that helps customers resolve their tax problems, but a free service for consumers. Partners cannot pay us to guarantee favorable editorial reviews or ratings. We do not publish favorable (or unfavorable) editorial reviews or assessments at the direction of an advertiser or partner. We always work to put consumers first and do our best to provide value in meaningful ways, but our reviews are subjective.
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Solvable is compensated by some of the companies seen on our website. Most often, Solvable receives fees when one of our readers clicks, fills out a form, applies for, or receives a financial product from one of our partners. We also earn fees for capturing consumer stories and writing about them, displaying advertising, having our partners sponsor certain parts of the site, and writing content that may be relevant to our partner and their audience. This compensation may impact where products appear on this site, including article pages, comparison listings, the order in which they appear or if they will even appear on a given page, and our matching recommendations. Solvable has not written about, reviewed, or rated all financial products available to consumers.
In addition, we may be compensated in the following ways:
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Marketing tax resolution, tax preparation, tax audit help and general tax assistance.
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We hope that you find Solvable helpful in your efforts to get a fresh start.
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Be sure to speak with your representative about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask up front about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $35,000 may be available through participating lenders or affiliates; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. In some cases, lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Ask your representative for details.
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Business Loans are those loans that are for commercial use and any property and/or proceeds from the proposed request will be used by the requestor for commercial purpose only and not for any personal, family or household purposes.
Most of our Business Funding Partners or affiliates, do not require collateral for business loans; however, please note that it is possible to be offered another product by the lender depending on your needs and if the underwriting requirements dictate the same. Traditional bank and SBA loans generally are known for collateral requirements.
There is no one-size fits all business loan. Rather there are several types that will likely be offered and or discussed with you upon completing your request. Business Funding Partners determine the underwriting criteria necessary for approval, you should review each Partner’s terms and conditions to determine which business funding option works for your business’s financial situation. All reasonable efforts are made to provide and maintain accurate information. All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each Partner’s discretion. There is never a guarantee your business will be approved for credit or that upon approval your business will qualify for the advertised rates, fees, or terms shown. Lender terms and conditions will apply and all products may not be available in all states. Ask your loan representative for details.
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Potential savings may vary based on the interest rates, balances and remaining repayment term of the loans you are seeking to refinance. Your overall repayment amount may be higher than the loans you are refinancing even if your monthly payments are lower. Variable rate options will fluctuate over the term of your loan with changes in the LIBOR (or other index utilized by the lender) rate, and will vary based on applicable terms and presence of a cosigner. Fixed interest rates may be based on applicable terms and presence of a co-signer. Additional terms and conditions, and rates are subject to change at any time without notice and may not be available in all states or for all types of current student loans. Such changes should only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Lenders are required to provide every potential borrower with disclosure information before they apply for a private student loan. The Lender you select is required to provide you with an Application Disclosure and an Approval Disclosure within the application process before you accept the terms and conditions of your loan. solvable is not a lender or creditor, it does not offer, extend or alter credit terms. Only participating lenders can perform the full application and deliver the required disclosures, please ask your lender about rates, terms, fees, and potential discounts that may be available for each product.
Please Note:
Certain federal and private student loans may not be eligible for consolidation/refinance.
Certain consolidation/refinance plans may result in higher monthly payments or negative consequences (i.e. prepayment penalties).
Consolidation/refinance may lead to other negative results, such as loss of grace periods.
Loans in default generally cannot be consolidated until completion of a repayment trial plan so tell your lender if you are in default and determine relevant options (be wary of those asking for upfront fees as well)
Other options or programs may fit your needs (i.e. personal loan, debt consolidation and/or debt relief). Consult your financial and/or tax advisor prior to making any decisions.
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You should contact your tax professional or other financial advisor to determine if you can actually realize savings by refinancing when it can extend the life of your current loan. You should ask the lender about all terms, rates, fees and costs associated with each product and if you will realize a net tangible benefit from the same. All initial estimated savings is done by trying to calculate what your rate may be; however, solvable does not have that information and cannot guarantee potential savings or that lenders will approve you for such product that would warrant those savings. Rates are not guaranteed and change daily. Lenders/Brokers/Dealers/Partners that perform the actual underwriting will have to determine if you meet their underwriting criteria which is unknown to solvable at the time of matching/offer/quote delivery. All amounts are estimates and examples only and do not represent an actual offer.
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