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Do Delivery Contractors Qualify for the New EIDL Grants? (Doordash Uber Eats Grubhub Instacart etc)

Quick Reference: Tax and PPP help.

After more than enough drama, the new stimulus program has been passed into law. Parts of that package include the extension of two programs that may help contractors for Grubhub, Doordash, Uber Eats, Instacart, Lyft and other gig companies: the Paycheck Protection Program and the Economic Injury Disaster Loans / Grants.

Stimulus money falling from the sky
Dollars falling from the blue sky.

As it was when these were introduced with the CARES Act, Independent contractors and sole proprietors are eligible for these programs. However, eligibility is a little more restricted this time around.

This article focuses on the EIDL under the new stimulus passed in late December 2020. We'll address questions like

  • Do delivery contractors for gig apps like Doordash, Uber Eats, Lyft, Grubhub, Instacart etc qualify for the new round of EIDL grants and loans?
  • How are the EIDL qualifications different this time around?
  • Can you take the EIDL grant if you received the $1,000 grant previously (typical amount for independent contractors)?
  • When and how can I apply as a sole proprietor?
  • What do I need to do to prepare for my application?
Start button labeled "Disaster Recovery" along with the following text: Disclaimer: Information on the new stimulus program is rapidly changing. I will do my best to keep up on changes, but be aware things can and will change. Please note: I am not a legal or financial professional and this is not financial advice. Please seek your own professional advice related to your individual situation.

Do delivery contractors for gig apps like Doordash, Uber Eats, Lyft, Grubhub, Instacart etc qualify for the new round of EIDL grants and loans?

Independent contractors and sole proprietors are eligible for the EIDL loans and advance grants. There are some additional qualifications that we'll discuss.

Delivery contractors were eligible for the EIDL programs during the first round introduced in March 2020. Nothing has changed about this.

In a nutshell, here's how it worked. You could apply for the EIDL loans through the Small Business Administration (SBA). If approved, the SBA would immediately send an advance of up to $10,000. That advance was essentially a grant, as it was forgivable.

Then you had the option to borrow an additional amount beyond that grant. That portion was a true loan, and it had requirements as to how it could be used.

Many contractors applied for and received the initial grant. For most, the grant was only $1,000. That's because the SBA limited it to $1,000 per employee. As sole proprietors, there's really just ourselves.

How are the EIDL qualifications different this time around?

Let's look at the requirements from the initial round of loans and grants from earlier in 2020. To qualify, you had to be:

  • A small business with 500 or fewer employees. Self employed individuals were eligible. I don't know of any of us who are contractors for these gig companies have more than 500 employees.
  • You had to be impacted by Covid-19. In the application, it simply meant you had to certify that your business was impacted.
  • You had to have been in business by January 31.

The latter two requirements remain.

Here's the part that's not real clear yet. One of the priorities in this round of funding is to get grants to those who weren't able to get them last year.

I don't know if you'll qualify under just the above qualifications, or if you have to meet the new qualifications below.

However, here are the changes:

  • The total number of employees cannot be more than 300. I think we're still safe here.
  • You have to be located in a low income community
  • You have to have suffered an economic loss greater than 30%

There's a lot of language in this bill. It's hard for me to tell for sure if these addtional requirements are all encompassing.

There's information that they want to give some priority to those who were approved but after the grant funds had run out. That tells me that maybe those who applied previously may not have to meet the additional requirements.

One other difference may be that self employed individuals may qualify for more than the $1,000 grant. I'll talk about that more in a bit.

Let's look at these changes.

You have to be located in a low income community.

Your business address has to be in a low income community. Here's how the new stimulus program defines “low income community.” Your business location is a low income community if it meets one of the following:

  1. 20 percent or more of families in the area are below the poverty line.
  2. Median family income in the area is 80% or less of the median family income in your state
  3. Median family income in the area is 80% or less of the median family income in your metro area.

You can read more on how to tell if you're in a low income community. The following video may help as well.

The tool mentioned can be found at https://geomap.ffiec.gov/FFIECGeocMap/GeocodeMap1.aspx

You have to have suffered an economic loss greater than 30%

Here's how I understand this:

If any period of 8 consecutive weeks in 2020 had a total gross income less than the same period in 2019, you would qualify.

So for example, If you made $6,500 during the eight weeks from November 1 to December 26, but in the same period of 2020 you made $10,000, that means you had an economic loss of 35%. $6,500 is 65% of the $10,000 the year before.

If you had to stay home, you were quarantined, or you just made significantly less money because your market was over-saturated, you have a case for claiming an economic loss.

Rideshare drivers are going to have a higher probability of meeting this criteria than delivery drivers who kept delivering. That's because the rideshare business dropped dramatically whereas delivery increased.

You may qualify for the full $10,000 regardless of number of employees.

The writer of this article in Hello Skip understands the legislation to read that if you meet the low income requirement AND the loss of income requirement, you can qualify for the full $10,000 grant.

Even if you only have yourself to claim.

Under the original grant, self employed individuals without employees only received $1,000. This was because it was based on $1,000 per employee.

I'll update this as I get clarification, but the way it looks right now, if you qualify as being in a low income area with a loss of income, you may qualify for the full $10,000 advance.

Can you take the EIDL grant if you received the $1,000 grant previously?

Maybe yes, maybe no.

You may notice a theme in this article. “The way that I understand it.”

That's because it's early.

Anyway, based on what I've read in the act itself and the interpretations I've seen out there here's what it looks like:

If you received the $1,000 grant earlier in 2020 but you fail to meet both the low income community requirement or the loss of income requirement, you will not be able to take another grant.

However, if you meet both of those requirements (and I'm assuming you don't have 300 employees) you may qualify for the remainder of the $10,000 grant as it seems to have been originally intended.

In other words, it appears you would receive the difference of the $10,000 and whatever grant you received the first time around. If the information at Hello Skip that I linked above is correct, that appears to mean that most contractors who qualify would get $9,000 ($10,000 minus the initial $1,000 grant).

When and how can I apply as a sole proprietor?

The when is a good question.

Here's the best way to put it: As I write this, it's been four days since the act was signed into law. The SBA's EIDL is still showing that the advance is no longer available.

Screenshot from SBA website, accessed four days after the stimulus was signed into law, stating "EIDL Advance: NO LONGER AVAILABLE"
Screenshot from the SBA's website stating that the EIDL advance is no longer available – accessed four days after the stimulus was signed into law.

No update. No change to say check back later.

These guys aren't moving fast.

I believe that the act stipulates they have to get their crap together within fifteen days of the signing of the law. That would mean January 11 at the latest.

That said, they didn't exactly set the world on fire the first time around. I'm not holding my breath.

Once they do get everything worked out, and all the rules and documentation requirements, you'll apply through the SBA website.

If you received the initial $1,000 grant, you may not need to apply. The legislation actually instructs the SBA to contact those who received the grant about next steps to take.

Do not apply through any other location. While the PPP loans do apply through banks, the EIDL is done directly with the SBA.

What do I need to do to prepare for my application?

The application form for the earlier loan is still up on the SBA site. I'm assuming the link will be the same (I'll update it if it changes).

I'm not sure what to tell you as to whether to start the process already. The plus side is it maybe gets you in the queue.

The down side is that the form as I write it is obsolete. It doesn't have the current qualifications listed. Will ‘being in queue' be any good if they make you go back and start all over again?

Here's how I'm looking at it:

1. Keep an eye out for when the application is opened up.

You can keep checking back here. I'll update things as soon as I know anything. You can also keep up with several other sites.

Once things are up, it's going to be all over the place.

2. Get your bookkeeping in order.

As I post this on New Year's Eve, 2020, (thank goodness it's over!) I'm expecting it to be a week to a week and a half.

But you're going to need good records.

This time around your Schedule C or even your 1099's aren't going to be enough.

Remember how you need to show that you had an 8 week period in 2020 that earned 30% less than the same period in 2019? You can't document that off of a Schedule C.

They haven't come up with the rules, but I'm guessing at the least you'll need a profit and loss statement.

And that means you need your business records in a way that at least somewhat resemble… well, business records.

You can read more about the basics of getting started with bookkeeping as an independent contractor here.

I highly recommend you get a program or an app where you can generate a Profit and Loss statement that gives you the numbers on a weekly basis.

If you want a free app that's easy to work with, Hurdlr is the best option that I've found. The free version has some reasonable reporting functionality, the premium and pro (paid) versions start looking more and more like full blown accounting programs.

If you want something a little more widely recognized and accepted you probably want to look at Quickbooks. Put it this way: a lot of tax pros love quickbooks because it's just that widely used.

Quickbooks Self Employed is cheaper and is set up with the independent contractor in mind. It's got some major limitations, and you can read my review of it here. Quickbooks Online is a much more full featured book keeping program with plans starting at $25 per month ($12.50 to start with my affiliate link).

I know Stride Tax is a very popular expense and mileage tracking app in the driver community. That one's not going to help you much here. Stride's reporting is extremely limited and you're not going to be able to pull weekly reports like you can with other apps.

3. Gather documentation.

I would expect that as self employed individuals, we'll need some further proof beyond just bookkeeping reports. Anyone can make that stuff up.

Be prepared to provide documentation that shows your weekly income.

Some apps are great at providing reports that document your income.

And then there's Doortrash. If you're lucky you can get 6 months worth of data.

Find whatever documentation you can get from the apps, print it out and h ave it ready.

The big one I recommend you get is bank records. Anywhere you had deposits sent to you, get a printed bank record.

Don't skip anything. If your documentation doesn't match up to your 1099's or your year end taxes, you'll have some explaining to do.

And oh, by the way, get your 1099's, Schedule C, and tax records together from 2019. I guarantee you'll at least need the 1099.

We didn't need any more than the Schedule C the first time around. However, at that time we didn't have the specific qualifications that are such an important part of this round of loans and grants.

Anything you can get to document your income, get it together.

When I find out specifics, I'll update.

4. Check your area's income stats.

I talked about how to do that earlier in the article. Find out if your community income is considered low income.

I'm going to guess that a high percentage of gig workers live in lower income areas. That's not universal by any means.

But it helps to find out if you qualify on that end.

5. Keep an eye out.

I know, I said that already.

But that's the reality. Things are going to change. A lot of details will get clarified.

If you think at all you need this assistance, stay on top of things.

Even if some of the early information looks like you might not qualify, stay up to date.

Things are going to change. We just don't know how, where or when.

Frequently asked questions about the latest EIDL Loans/Grants and how they relate to gig economy contractors

Do delivery contractors for gig apps like Doordash, Uber Eats, Lyft, Grubhub, Instacart etc qualify for the new round of EIDL grants and loans?

Like the first rounds of the EIDL loans and grants, self employed contractors or sole proprietors are eligible for the EIDL grants, provided they meet certain other qualifications.

How are the EIDL qualifications different this time around?

There are additional qualifications. The maximum employee count drops from 500 to 300, though that won't impact gig workers. You may be disqualified if you don't live in a high income area or if you didn't show at least a 30% loss of income over an eight week period from 2020 to 2019.

Can you take the EIDL grant if you received the $1,000 grant previously (typical amount for independent contractors)?

You may be able to take further advances if you meet the low income community requirement and you can demonstrate a 30% loss of income for portions of 2020 compared to 2019. Indications are that some may be able to qualify for the full $10,000 regardless of how many employees (minus the $1,000 initial grant).

When and how can I apply as a sole proprietor?

The act gives the SBA 15 days to establish rules for applying for the new round of EIDL grants/advances/loans. The stimulus was signed into law December 27, creating a January 11, 2021 deadline. That's not a guarantee that they will be ready to take applications. Legislation requires the SBA to contact previous grant recipients about next steps. EIDL applications are made only through the SBA website.

What do I need to do to prepare for my application?

Get your documentation together. This is a perfect time to get your bookkeeping up to date. Get a legitimate bookkeeping app or program, as you need to demonstrate a loss of income over an eight week period. You'll likely need profit and loss statements for 2019 and 2020, your schedule C for 2019, and possibly bank records to back up your income claims.

Could this help someone else? Please share it.

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Briana Owsley

Friday 5th of February 2021

I love how informative you were!! I will be checking back for more updates!!

Thanks

ronald.l.walter

Friday 5th of February 2021

I appreciate that. I hope in the next couple weeks the SBA gets rolling on this.

Comments are closed.