Three Ways New PPP Rules Help Gig Economy Contractors/Workers (Doordash, Uber Eats, Instacart, Lyft, Grubhub)

The Biden Administration released new rules for the Paycheck Protection Program. Those rules offer greater relief especially for gig economy contractors such as Doordash, Uber Eats, Grubhub, Instacart, Lyft and others.

However, there's not much time for contractors to take advantage of these new rules. However, The current version of the PPP is set to expire on March 31.

Improvements for gig workers

The following three changes in the rules will help more gig workers obtain more forgivable funding as they deliver for Doordash, Uber Eats, Instacart etc or as they provide rideshare services with Uber and Lyft.

1. A two week period where they're only taking applications from very small businesses and self employed independent contractors.

In practice that window is only for about three business days.

Starting February 24th, 2021 the Biden Administration declared that for two weeks the SBA could only take applications from businesses with 20 employees or less. This would allow small businesses and self employed individuals to get priority for their applications.

However, the SBA took their time getting the rules out. They finally released the rules on March 3 but aren't expected to begin processing applications under the new rules until March 5.

In other words, the window for the dedicated applications is only about three business days.

2. A new way of calculating the loan amount means gig workers can receive larger forgivable loans.

This is huge for those of us who use our cars for gig economy work.

Previously, the Paycheck Protection Program figured out how much you could receive based on your net profits. Now, it's based on the gross revenue.

One of the huge advantages for a lot of gig workers is the ability to write off the miles that we drive. That lowers our tax bill tremendously.

However, it also meant we couldn't receive as much.

Under the original rules, the PPP let you take out 2.5 months worth of your line 31 total on your Schedule C. That's the amount that is left over AFTER your miles and other expenses are deducted.

The new rules from the SBA say it's based on Line 7 of your Schedule C.

In other words, it's two and a half months of what you receive directly from Doordash, Uber Eats, Grubhub, Postmates, Instacart, Uber, Lyft or any other gig apps.

That's huge. For many gig workers, that could mean several thousand dollars more.

And loan forgiveness is based on the same numbers. In other words, the whole amount is fully forgivable.

3. More gig workers are eligible.

Many in the past were left out because of restrictions. These changes probably benefit gig economy contractors more than any other type of business owner.

In the past, if you had student loan issues, that might have prevented you from receiving this aid.

If you were here from another country working legally but only had an ITIN instead of a Social Security Number, that probably would have prevented you from applying.

If you had certain felonies you may have been prohibited from participating.

The new rules open the door for many to receive the PPP loans that wouldn't have qualified before.

What does this mean if you've never received PPP funding?

It means a small window has opened up for you to receive funding that gives you a shot in the arm during this pandemic.

Related: Step by step using Womply's Fast Lane, a fast easy PPP application that streamlines the process for qualified applicants who've never received the Paycheck Protection Program before.

As of the writing of this article, there are a few days left in that dedicated window for small business applications. This particular time frame makes it more likely the SBA can get your application processed and approved.

However, the program as a whole expires in just a few weeks. Many business leaders are urging Congress to extend that deadline. Warren Buffet was quoted in The Hill:

I think the country owes it to the millions of small-business people … just renew the PPP and get us to the end of the tunnel,

Warren Buffet as quoted in The Hill

Unfortunately, we all know that Congress doesn't move quickly these days.

What does this mean? It means don't take your time. If you've not applied, get your application in.

Womply has a FastLane application that you can complete. They gather the information and documents from you, then find a lender and submit the application to the lender. There's no cost to you for this process.

Full disclosure: I have an affiliate relationship with Womply and may receive compensation from them. That said, I've personally applied through their portal. They've made it much easier to find a lender who can process the application for me.

What does this mean if you've already applied and been funded?

Those of us who applied under the old rules are, unfortunately, stuck under the old rules.

In the new rules released by the SBA, page 7 gives us this bit of news:

A borrower whose PPP loan has already been approved as of the effective date of this rule cannot increase its PPP loan amount based on the new calculation methodology.

SBA's Interim Final Rules on PPP Loan Calculations and Eligibility.

Hopefully you can tell by now, things are always changing. Many are putting pressure on the government to make this retroactive.

At this point, those of us who have already been approved for the Paycheck Protection Program probably won't be able to apply for the difference between what we did receive and what we would have received under the new calculations.

The best thing I can tell you is keep an eye on things. You never know if things will change.

To me it would make sense. It feels kind of like we're being penalized for being on top of things.

How do I figure out what I would be eligible for under the new rules?

It's going to be based on your average monthly gross income from either 2019 or 2020, as reported on your Schedule C. Under these new rules, it's based on what you were paid by Doordash, Instacart, Uber Eats, Lyft or other gig companies, rather than the amount left after expenses.

Here's that formula, it's pretty simple. Divide Line 7 from your Schedule C (your total gross earnings for the year) by 12 to get your monthly average. Now multiply that average by 2.5.

For example, if you received 36,000 gross income (before expenses), dividing that by 12 gives you an average of $3,000 per month. Multiply that by 2.5 and you have $7,500.

Under the original PPP this was a bit tougher if you started your gig work in mid year. Say you brought in $3,000 per month but started on July 1. When it was based on your 2019 Schedule C, they calculated average monthly income as $18,000 divided by 12, or only $1500 per month.

Now you can choose the higher of the two (2019 or 2020) as your basis.

As always, keep an eye out for changes.

Things are constantly changing.

The new rules that were published are entitled “Business Loan Program Temporary Changes.”

Money can run out.

You could get stuck in a logjam that keeps your application from being processed and approved in time.

The government could change their minds about allowing a longer time period or letting previous borrows adjust their amounts.

Keep up on the news.

Thus, my best advice in the end is to act quickly if you are going to apply.