In this article of Ppp Loan For Musicians, the White House announced changes last Wednesday that will make forgivable or partially forgivable Paycheck Protection Program (PPP) loans feasible for many single-person businesses that previously did not qualify for loans or whose loan amounts were small because they did not have additional employees and because loan amounts were calculated based on Net Profit.
These businesses’ loan amounts will now be determined by their Gross Income (before costs), potentially allowing them to take out significantly higher loans. Since last spring, CERF+ has advocated for this move, and we are thrilled that it will make PPP loans for musicians more accessible to many artists, contractors, gig workers, and other enterprises.
Musician is a self-employed individual that obtained a $20,800.00 Coronavirus-related PPP loan from the SBA in July, 2020 at 1526 South Wooster Street in Los Angeles, California.
During the applicable loan loan term, the company declared itself to be a Black or African-American female-owned business that employed at least three individuals.
There Should Be No Recrimination Against Musicians Who Used PPP Loans:
We live in a shame-based era. Everyone wants to raise an ugly finger at others for being morally inferior to themselves, fueled by social media, to hide from their own mistakes and flaws. If there’s someone worse off than you, you can’t possibly be all that horrible. However, by focusing on other people’s inequalities, you avoid dealing with your own.
Despite the fact that some have characterized it as a cash grab by millionaires, aided by certain embellished and misleading headlines in the media, there should be no shame in major music labels taking money through the government’s Paycheck Protection Program, or PPP, to keep their road crew and support staff financially stable.
The names of the businesses that received small business loans under the $2 trillion CARES Act, which includes the Paycheck Protection Program, were disclosed by the Small Business Administration and the Treasury Department on Monday, July 6th.
Many major music franchises were represented in the list of names published by Rolling Stone, Pitchfork, and others, including The Eagles, Green Day, Guns N’ Roses, Tool, Nickelback, Pearl Jam, Weezer, Imagine Dragons, Incubus, Slipknot, My Chemical Romance, Cheap Trick, The Chainsmokers, Wiz Khalifa, French Montana, and Papa Roach.
Luke Combs, Tim McGraw, Rascal Flatts, Chris Stapleton, Kip Moore, Chase Rice, Gary Allan, Cody Johnson, Wilco, Gary Clark Jr., and Jason Isbell are among the country and roots artists who sought for and received PPP loans.
Though each loan is different in size, they typically vary from $150,000 to $350,000, with some loans reaching as high as $2 to $5 million. However, this money does not flow directly into the coffers of the performers listed in the media stories. It will be distributed to their road crews and support personnel. Despite the fact that the names of the performers are reported, the loans are usually given to their touring companies.
These are not grants, but rather loans. Under the PPP program, however, if the loan recipient can show that the money was utilized to sustain employees during the COVID-19 closure, the debt can be forgiven in part or in full. The PPP program’s philosophy is simple: rather than forcing companies (or in this case bands) to lay off employees who will end up on the unemployment rolls and relying on government assistance anyway, it’s preferable to keep them under the umbrella of their current employer, so that when the economy recovers, they can resume operations without having to go through the hiring process again, and employees can continue to receive health benefits.
However, this hasn’t stopped some people from denouncing the loans taken out by the affluent. When it was found that corporations like Shake Shack and the Los Angeles Lakers had taken out PPP loans, public pressure increased on them to repay the money, which they eventually did. The amount of money allowed by Congress for the program at the time was limited, and it ran out for a short time until more was allocated.
The ethical question is whether the businesses seeking PPP loans for musicians are affluent and stable enough to keep paying their employees throughout the closure without government support. The music industry, on the other hand, is unique in that it was one of the first industries to be shut down, and it will be one of the last to reopen. In some locations, Shake Shack can still provide drive-thru service and minimal seating. The NBA is slated to begin play on July 30th, but in limited circumstances and with no audiences.
Meanwhile, musicians have few if any options, with the exception of streaming concerts, which are best used to generate money for charity. Even if a well-known musician performs at a ticketed streamed event, it won’t aid their road crew. The side players and tour employees, who will receive the majority of these PPP loans, have been left out in the cold the most in the music industry. Through their financing, the Eagles alone were able to support a staff of 50 workers. Through his financing, Cody Johnson was able to keep 17 employees.
The real worry should be if smaller bands requested for similar loans but were denied because the funds had already been diverted to major stadium performers like The Eagles and Green Day. Due to the PPP program’s replenishment, if a band does not obtain a loan, it is most likely because they did not apply, did not apply soon enough, or did not have all of their paperwork in order.
Yes, it would have been wonderful if some of the PPP recipients could have gone into their own pockets to support payment as a show of unity with their employees. Florida Georgia Line, for example, did exactly that. But it is the government’s responsibility, not the artists’, that they aren’t working. The PPP program was created to disincentive business activity that was deemed harmful during the COVID-19 outbreak.
This is the same reason that more unincorporated artists should not be ashamed to apply for unemployment benefits, which have been extended to gig economy employees in several areas. It’s not the musicians’ fault that they aren’t working. It’s not a case of being lazy. Because it is the government that has put them in this financial bind, the government should assist them in overcoming this unprecedented adversity.
However, certain musicians, probably most notably in country music, are fundamentally opposed to accepting any government support, regardless of the circumstances. And it’s possible that some major musicians are able to support their crew without the help of PPP, and didn’t want to risk bad press by requesting for a loan. Some, like Zac Brown, laid off their staff anyway, despite receiving a PPP loan for his Camp Southern Ground charity camp.
“Boy y’all really tossing the word ‘country star’ around today,” Jason Isbell stated on Twitter after Chase Rice and Chris Jason were chastised for playing shows recently. It’s similar to the adult film industry in that not everyone is a’star.’ Some people are so broke that they’ve resolved to perform concerts this weekend regardless of what happens to their non-isolated, mask-free audience!”
There’s no defending these artists for allowing spectators to rush the stage instead of postponing the event until they were back in a socially isolated area, as the promoters and venues had intended. When you get government aid, it’s easy to condemn people for doing performances to make ends meet.
However, no matter how an artist approaches the COVID-19 shutdown, there should be no shame in wishing to provide for their staff using government-backed loans available for that purpose. This is a once-in-a-lifetime opportunity in the music industry, and everyone did what they thought was best to keep themselves and their music families safe and secure.
What is a Public-Private Partnership (PPP) Loan?
During the Coronavirus (COVID-19) crisis, PPP is a forgiving loan scheme that assists small businesses keep their workers employed.
Oh, wait, I thought this was past its expiration date. Is it still possible to get these funds? Is it going to be extended?
Yes and yes again. The first iteration ended in August of this year, and the second will end in August. The Paycheck Protection Program’s second version was set to expire on March 31, however it has been extended until May 31. Until then, all qualifying organizations can apply through a participating lender.
Who can apply for Ppp Loan For Musicians?
If you own a small business with less than 500 employees, or if you work in a sector with a higher-than-500-employee-based size threshold set by the SBA, you may be eligible for a loan. This covers tribal enterprises and veteran organizations with a 501(c)(19) status. Sole proprietors, independent contractors, and self-employed people are all included.
What about charitable organizations?
Nonprofit organizations are eligible. The initiative will be open to 501(c)(3) groups, including religious organizations. The SBA’s affiliation criteria apply to nonprofit organizations.
I call myself a “small business,” yet it’s just me as a lone proprietor with no staff. Am I eligible as a freelancer or a member of the gig economy?
Yes. The Paycheck Protection Program is available to sole entrepreneurs, independent contractors, gig economy workers, and self-employed people.
I didn’t apply the first time around. Is it true that I am eligible?
Yes. You’re eligible for a PPP loan called “First Draw,” which you can learn more about here.
I applied last year and was approved for a PPP loan. Is it true that I am eligible?
You could be right. Certain qualifying borrowers who have already received a PPP loan can now apply for a “Second Draw” PPP loan with the same general loan terms as their First Draw PPP loan.
Draw No. 2 Payroll costs, including benefits, can be financed via PPP loans. Mortgage interest, rent, utilities, worker protection costs associated to COVID-19, uninsured property damage charges caused by looting or vandalism in 2020, and some supplier costs and expenses for operations are all possible uses for the funds. More information can be found here.
What has changed for sole proprietors and independent contractors since last year?
Previously, sole proprietors could apply for a PPP loan based on their net income from 2019 or 2020, as stated on a Schedule C. The PPP loan computation process will change after March 3.
If you don’t have payroll, your PPP loan will be based on your gross revenue as reported on line 7 of a 2019 or 2020 Schedule C. This is a significant departure from previous year’s calculations, which were based on net income.
Take your gross income (up to $100,000) and divide it by 12 to get your average monthly payroll bill. Multiply your typical monthly payroll expense by 2.5 to get a monthly payroll budget. This is the amount of your PPP loan.
How to Get Ppp Loan For Musicians Started:
What is the location where I may apply for the Paycheck Protection Program?
Any lending institution that has been approved to participate in the Paycheck Protection Program (PPP) can apply. This might be your current bank or a neighboring bank. The majority of them have an online application.
What happens if I don’t have access to a bank?
To apply for PPP, you don’t need a regular bank account. Thousands of institutions already participate in the SBA’s lending programs, including many community banks, some of which may be in your neighborhood.
Even if you have one, it doesn’t have to be your regular bank or lender. To apply for the program, you do not need to go to any government office. You can contact your bank or use the SBA’s online Lender Match tool to locate SBA-approved lenders in your area. You can also contact the Small Business Development Center or WomenVenture in Minnesota for free advice and referrals to lenders.
There are additional nonprofits, companies, and online providers that can handle PPP loans, such as PayPal or Blue-vine. Businesses and organizations in North Minneapolis, on Lake Street in south Minneapolis, and in St. Paul’s Frogtown/Rondo and East Side areas are eligible to join Twin Cities LISC. Priority will be given to firms owned by BIPOCs.
I’m all set to apply. What should I have on hand?
You’ll need these items to prove your income if you’re a sole proprietor, independent contractor, or self-employed individual:
+ Schedule C for Sole Proprietors and Independent Contractors on Form 1040 This is the form on which you will record your business’s revenue and costs. You must submit a 2019 or 2020 Form 1040 Schedule C with your PPP loan for musicians, regardless of whether you submitted a 2020 IRS tax return.
+ 1099 tax forms
+ Records of payroll processing and payroll tax filings (if relevant).
+ If none of the following are accessible, bank records can be used. Account statements can be in the form of images or PDFs.
+ For direct deposit, routing and bank account information are required.
Is it appropriate for me?
What if I’m adamant about not taking out a loan? I don’t want to be stuck making payments in a few months or a year if the economy is still in shambles.
If you meet the loan forgiveness standards, you will not be required to make any payments since the loan will be forgiven. Payments will be deferred for at least 6 months if you are obliged to repay any of the funds. You are the only one who can ultimately decide if this program is good for your company. If you have any queries regarding your individual circumstances, use the Lender Match tool to contact a lender.
Is this a credit card? It appears to be a grant.
A grant is money that is handed to you with no strings attached. There are some conditions that must be completed in order for the PPP loan for musicians to be forgiven. A supplementary loan forgiveness application must be submitted as well. If the debt forgiveness conditions are not met, the loan must be returned.
PPP Loan For Musicians Applications:
What can I do with the money to get the loan forgiven?
The sum of payroll expenses and existing interest payments on mortgages, rent payments, leases, and utility service agreements determines the amount of principle that can be forgiven. Employee salaries (up to $100,000 per year), hourly earnings and cash gratuities, paid sick or medical leave, and group health insurance premiums are all included in payroll costs.
What portions aren’t going to be forgiven?
You can use the Paycheck Protection Program for other business expenses like inventory, but that portion of the loan will not be forgiven. To get complete debt forgiveness, a borrower must use at least 60% of the PPP loan for payroll costs, with non-payroll costs accounting for no more than 40% of the loan forgiveness amount.
I’m the only one working, and I’m not on payroll. What can I do with it?
If you don’t have payroll, your PPP loan for musicians will be based on your gross revenue as reported on line 7 of a 2019 or 2020 Schedule C. (Keep in mind that this is the bit that differs from previous year.)
Take your gross income (up to $100,000) and divide it by 12 to get your average monthly payroll bill. Multiply your typical monthly payroll expense by 2.5 to get a monthly payroll budget. That is the amount of your PPP loan.
Forgiveness and the timeline
When will the debt be forgiven?
After the 8-week or 24-week period has passed since you took out the loan, the loan is forgiven. Borrowers will engage with lenders to ensure that approved expenses are reimbursed and that the appropriate amount of forgiveness is granted.
If you submit a loan forgiveness application to your lender within 10 months after the end of your loan forgiveness covered period, you will not be required to make any principal or interest payments on your loan until the SBA remits the loan forgiveness amount to your lender (or notifies your lender that no loan forgiveness is allowed).
How do I go about getting my student loans forgiven?
Self-employed people can use Form 3508S, a streamlined forgiveness application. If your loan is less than $150,000, you’ll need to fill out this form. However, double-check with your lender.
Is the interest on the forgiven loan amount my responsibility?
No, the borrower is not accountable for the interest accrued during the 8-week or 24-week covered period if the whole principal of the PPP loan for musicians is forgiven. The remainder of the loan, if not forgiven, will be governed by the loan terms that you and the lender have agreed to.
Other loans and payments for alleviation
I’m receiving unemployment compensation. Will this have an impact on my benefits?
Yes, your PPP payroll payments will have an impact on your unemployment benefits. Once the PPP funds have been used, you may be able to reapply for unemployment benefits.
If you’re a musician who makes a living from gigs, you’ll probably be eligible for some covid relief money from the federal government shortly!
On December 20, Congress enacted “The Consolidated Appropriations Act, 2021.” This bill adds to the Paycheck Protection Program, a pandemic relief program run by the Small Business Administration in the United States (SBA).
More information about the new round of funding is still pending. In the meanwhile, here are some steps you may do to prepare yourself to apply for a forgiven loan.
- Keep up with the latest developments in PPP loans and covid relief.
- Start thinking about your taxes for 2020 now. To indicate income loss due to the pandemic, you’ll need data from both 2019 and 2020.
- Get to know the Lendio and Bluevine websites so you’ll be ready to apply when the time comes.