The CARES Act, a $2 trillion coronavirus economic stimulus package signed into law March 27, includes some of the most far-reaching benefits for gig economy workers and small businesses in U.S. history.
That’s good news for the music industry. But as banks and state unemployment offices rush to update their websites and meet demand for web and phone applications, the process of requesting aid — let alone understanding it — hasn’t been smooth for everyone.
On Monday (April 6), the Recording Academy hosted a CARES Act webinar to discuss the bill’s impact on the music community with Greenberg Traurig attorneys Kelly Bunting and Monica Schulteis. “We’re getting guidance daily,” said Recording Academy chief industry, government & member relations officer Daryl Friedman. “This is really a very fast-moving process, and we’re keeping you informed in real-time.”
Read on for an overview on how the bill affects music industry workers and small businesses.
Everyone will (more than likely) receive a stimulus payment.
U.S. residents with adjusted gross income of up to $75,000 (or $112,500 for single parents, or $150,000 for married couples filing joint returns) are eligible to receive a one-time stimulus payment of $1,200 (or $2,400 for joint filings) from the Internal Revenue Service (IRS). For parents, there’s an additional $500 allotted for each child younger than 17.
If your income is above the threshold, that payment total will be reduced by $5 for every $100 of annual income above the threshold. But if you’re a single filer making more than $99,000 per year (or $136,500 for single parents, or $198,000 for joint filers with no children), you are no longer eligible.
For the vast majority of people, no action is needed. The IRS will calculate and automatically send the stimulus payment by check or direct deposit using the information in your most recent tax return (2019 or 2018). If you don’t file taxes but do get social security payments, the IRS will use that information for your check. To receive a check, you must have a social security number.
If you’re still unsure, TurboTax has set up a free online stimulus check calculator here.
For the first time ever, gig workers can receive unemployment assistance.
Self-employed workers and independent contractors (along with sole proprietors, part-time workers, and those with limited work histories) who are out of work due to the pandemic* are eligible for state unemployment benefits. This is the first time in history that those workers — which make up a large chunk of the music industry — have been eligible for these benefits.
The temporary program is state-administered but federally funded, meaning you must apply through your state’s unemployment benefits program (find it here).
The program adds an additional $600 per week from the federal government, on top of whatever unemployment compensation your state provides, until July 31. Most states offer 26 weeks of unemployment benefits, or a little over six months’ worth. Under the new program, if you have not found work by the time your state unemployment benefits run out, you will receive an additional 13 weeks of federal unemployment benefits.
No additional forms are needed for the federal benefits. If you apply and are approved for state employment benefits, you will receive the federal dollars automatically. The program is effective through Dec. 21, and both state and unemployment benefits are retroactive.
Requirements vary by state, but many states are also removing hurdles in the application process to help jobless people get benefits faster. Most states have waived the usual one-week waiting period for that first unemployment check, along with the requirement that applicants are actively looking for work. In some states, like California and Indiana, you must still certify that you are able and available to work.
And music workers who have been stripped of some, but not all, of their income may still apply for partial unemployment benefits. For example, consider a music teacher who has had 60% of students cancel sessions amid the pandemic. Even if that teacher retains the other 40% of students, he or she may still be eligible for partial unemployment to make up for the lost income.
Anyone who is furloughed or temporarily unemployed (or waiting for a postponed concert to be rescheduled, for example) may apply for benefits in the meantime. “Every state unemployment office offers partial unemployment benefits,” Bunting said. “If you’re furloughed, or temporarily unemployed and expected to call back, or if you expect that a gig will be [rescheduled] … file, file, file.”
Green card holders are eligible, she added: “As long as you are legally eligible to work in this country, you are eligible for unemployment benefits.”
If you are a member of a band, Bunting said that each member should file for unemployment benefits in their state of primary residence (which may be different from where the band is said to be “based”).
*“Out of work due to the pandemic” can mean a laundry list of things. You’re eligible if you lost your job or are unable to work because you have been diagnosed with coronavirus, have symptoms and are seeking treatment, or if anyone in your household checks those boxes. You’re also eligible if you are the primary caregiver for a child whose school has been closed; or if can’t reach work because work has been closed, a job has been cancelled, you’re under an isolation order, or you’ve been forced to quit a job due to coronavirus.
Small businesses — including many recording studios, independent publishing companies and even some freelance workers — are eligible for a variety of loans and grants.
The two main programs in the CARES Act that are relevant to small music businesses are Economic Injury Disaster Loans (EIDLs), which now include emergency disaster grants, and the brand-new Paycheck Protection Program (PPP). These loans are provided through the Small Business Administration (SBA). You can apply for both loans, but you can’t use the money for the same expenses.
Small businesses are defined as those with 500 employees or less. But under the new act, that also includes individuals who operate as independent contractors, sole proprietors (with or without employees) and self-employed people. The only caveat is that you must have been operational as of Jan. 31, 2020.
Eligible businesses can apply here for a low-interest EIDL of up to $2 million, which can be used to cover any expenses that would have been paid had the pandemic not occurred, like payroll, debts, rent and mortgage payments. These loans must be paid back.
The act also creates a $10 billion total fund for emergency disaster grants, which do not have to be repaid, as long as you use the money for the specified expenses. While applying for an EIDL using the above linked form, you can check a box to request an advance of up to $10,000 to cover immediate payroll, mortgage, rent, debts and other operating expenses while waiting for additional relief to come through. These grants are available until Dec. 31. And the payments will come quickly: The act requires the SBA to disburse money within three days of verifying the business’ or individual’s eligibility.
Finally, the CARES Act establishes a new type of loan altogether — the Paycheck Protection Program. The same businesses previously mentioned are eligible (though this time, the business must have been operational as of Feb. 15, 2020). Small businesses and sole proprietorships can apply for loans through SBA-certified banks now, and independent contractors and self-employed individuals can do so beginning April 10.
These low-interest, zero-fee loans of up to $10 million can be used to cover interest on a mortgage, rent, utilities, interest on debts, payroll costs and some employee benefits, like healthcare and annual leave. Repayment is deferred for at least six months, up to one year. These loans are available until June 30.
To calculate how much you’re eligible for, multiply your 2019 average payroll costs for all employees (up to $100,000 in salary per employee) by 2.5. Schulteis said that SBA guidance for independent contractors here has been inconsistent. But as of writing, employers should not include independent contractors in payroll calculations, and Schulteis recommended that independent contractors consider applying for a PPP themselves.
Because the PPP is meant to incentivize businesses to keep employees on the payroll, the SBA will only fully forgive loans — meaning you don’t have to pay it back — if all employees are kept on the payroll for eight weeks after the loan is given and if at least 75% of the loan is used for payroll costs. If you lose any full-time employees, or if salaries or wages decrease, forgiveness will be reduced — unless you’re able to restore full-time employment and salary levels by June 30.
A note for LLCs:
Individual members of the music industry often work as LLCs — for example, an independent producer or recording studio owner may bill through an LLC, even if they are the sole person on the payroll.
LLCs run by a single employee may be eligible for both a PPP loan and unemployment benefits; however, you can’t apply for both. Schulteis recommended that these individuals calculate the benefits they would receive for each and apply for whichever program provides the largest benefit.
What happens when these programs reach their end dates?
Each of these programs has a firm end date, yet it’s unclear when restrictions on mass gatherings will be lifted and when live concerts specifically will be reinstated. “For music people, the needs may be longer-term than for a lot of other industries,” Friedman noted. “Restaurants may [re-]open, but stadiums may not.”
Schulteis urged music workers to remember that the CARES Act is an emergency piece of legislation meant to provide short-term aid. Congress is currently constructing a fourth stimulus package. “The intent of the CARES Act was as a band-aid, life support for individuals and for businesses,” she said. “It is focused on keeping people afloat and solvent for a very short period of time.”
In the meantime, a coalition of music companies and artist rights organizations has constructed a Music Covid Relief online resource hub and is providing daily updates on Twitter. For more assistance, visit Billboard’s state-by-state resource guide for music professionals, which includes more than four dozen relief funds.