Contents:

8 min read

    8 min read

    At this point during the coronavirus pandemic, many drivers have received funding in a variety of ways, whether it was the economic stimulus check, unemployment, Pandemic Unemployment Assistance (PUA) or something else.

    Now drivers are beginning to wonder: do I have to pay this money back? What can I spend these funds on? Senior RSG contributor Jay Cradeur breaks down what you need to know about the coronavirus funding below.

    GetUpside Gas App

    It has been a while since I wrote about the many government-funded benefits for rideshare drivers during the pandemic, and what a long strange trip it’s been.

    While some drivers have ventured back on the road, the majority of us are sitting it out and collecting various forms of assistance.  We are choosing our health over a few extra bucks.

    However, places and states around the United States are opening again. Whether or not this is good is debatable (see below):

    A picture containing screenshot Description automatically generated

    Who knows if we will go through another lockdown again? One thing is certain: there is still some money flowing to drivers, but many have already received something and are wondering how they can appropriately spend their money without getting in trouble with the government.

    This article will review government benefits for all rideshare and delivery drivers and provide updates so that you are all caught up on what is available right now, plus how you can use the money you’ve received.

    Quick links:

    • Follow all of our latest videos on driver unemployment, funding and more on YouTube here
    • EIDL & PPP: you can’t use the funds you’ve received for the same things, so be careful!
    • Additional funding through PUA is expected to run out by the end of July, and unless Congress agrees to more funding, drivers unemployment could be cut drastically
    • Check out these ways on how to make money quickly

    Economic Injury Disaster Loan (EIDL)

    The EIDL is a loan program.  What is unique about this loan is that up to $10,000 of the loan amount is considered a grant, which does not have to be paid back.

    Initially, we were led to believe that we could all get a free $10,000.  However, we quickly realized that the Small Business Administration (SBA) changed the rules so that we could only get a grant of $1,000 per employee.

    Since we, the drivers, are a one-person shop, we could only get $1,000, which most of us did at the end of April.  The grant does not have to be paid back.  The loan amount above the grant is not forgivable and must be paid back.

    Right now, the EIDL is currently open again for everyone, not just agricultural businesses. In fact, if you were denied the first time around, you may have received an email from the SBA about re-applying, so make sure to check your email and Spam/Trash folders!

     

    What Can You Use EIDL Funds For?

    According to Money.com, “The EIDL grant can be used for essentially any business purpose”, including:

    • Paying employees
    • Payroll
    • Buying materials

    It cannot be used for:

    • Physical repairs
    • Expansions
    • Bonuses
    • Refinancing long-term debt

    The EIDL is designed to support you to get through the pandemic.  It is not intended for you to build a business or expand on your current business.

    Stick with the essentials such as covering your payroll (which means paying yourself to cover the income you are missing due to the pandemic) and business supplies, such as bottles of water, wipes, and masks.

    Paycheck Protection Program (PPP)

    The PPP is also a loan program.  What is unique about this loan is if you spend the money primarily on payroll and a few other expenses, the government will forgive the loan and you will not have to pay it back.

    Initially, when this program was launched, we did not even need to provide a tax return in order to qualify.  That changed and now the amount you are entitled to is equal to 2.5X your month income taken from Line 31 of your 2019 Schedule C.

    For most of us drivers, that amount is rather small, since we can take advantage of significant tax deductions such as mileage.

    Pro-tip: Make sure you are tracking all of your miles with a free app like Stride! (referral link)

    For example, let’s say you managed to earn $60,000 in gross revenue driving for Uber.  After all your deductions, you showed a net income figure of $20,000.  That equates to  $1,666.66 per month.

    Therefore, the maximum loan amount you can request is $4,166.66 (2.5 X monthly figure).  It’s not much, however, it is still available and it really is free money.  You will spend less than an hour on the application so you might as well get it while you can.

    For more information, you can access the SBA website and download a PDF, which provides answers to most questions.

    According to Kabbage, you can use a PPP loan for:

    • Payroll costs
    • Salaries
    • Costs related to the continuation of group healthcare benefits
    • Insurance premiums
    • Mortgage interest payments
    • Rent
    • Utilities

    For rideshare drivers, you can get your loan and then pay yourself.  We don’t have salaries to pay since we are sole proprietors.  We don’t have rent or mortgage payments since all we do is drive.  We don’t have office jobs.

    Pay yourself and then your loan will be completely forgivable.  I will share a new EZ form you can use later in the article.

    If you’re not sure which lender to go with, Kabbage has a partnership with Uber that you can learn more about here and in our video about how Kabbage is helping Uber drivers with their PPP loans below:

     

    What is the Difference Between EIDL and PPP?

    This is a question many people ask.  The main difference is the EIDL has the up to $10K grant while the PPP has the characteristic of being forgivable.  This graph from Bench.co sums it up nicely for us.

    According to Money, you can get both EIDL and PPP, but you can’t use the money from both for the same purposes.

    Unemployment Insurance (UI) and Pandemic Unemployment Assistance (PUA)

    UI is reserved for employees. Since Uber and Lyft and most gig companies classify drivers as Independent Contractors, we do not qualify.

    However, on March 27th, the Coronavirus Aid Relief and Economic Security (CARES) Act passed and a new program called the PUA was born. The PUA is an unemployment benefits program for Independent Contractors.

    As I write this, approximately two-thirds of all applicants have been paid out, while one third are still dealing with bureaucratic inefficiency and red tape.  This can be extremely frustrating when you desperately need the money to pay bills and put food on the table.

    The PUA initially provides your state’s minimum UI benefit plus an additional $600 per week during the months of April through the end of July.  For example, in California, the weekly amount is $167 + $600 = $767 per week.

    Updates to the Programs

    A screenshot of a social media post of a person Description automatically generated

    You can still apply for either an EIDL or PPP loan.  If you have received a PPP loan, then there is good news for you.  It is now very easy for you to submit documentation for loan forgiveness.

    The Treasury Department has put forth a new EZ Loan Forgiveness Application.  Click here for the pdf.

    A screenshot of a cell phone Description automatically generated

     

    As you can see, it is super simple to fill in the numbers and submit.  It looks like even if you got the loan early in the process based on only 1099s, you are now in the free and clear and can get the majority of the loan forgiven regardless of what you show on Line 31 of your Schedule C.

    Key Takeaways

    I don’t think this pandemic is over by a long shot. No matter how hard and how much we want to return to normal, it does not seem to be working.

    The first wave never became a wave.  Instead, we are riding out a long plateau that seems to once again be on the rise.

    This is not encouraging for drivers, for as Covid19 cases rise, so too does our risk of contracting the virus while driving.

    Another concern we all share is the generous $600 per week stipend we are receiving along with unemployment benefits is due to expire on July 31st.  That means there are only five more weeks of coverage (at the time of this article).

    How will the government respond to a significant portion of the citizenry still out of work while Covid19 cases continue to rise?  Time will tell.

    We will keep you posted. Until then, remember to social distance.  Wear your mask when you can’t social distance.  Be safe out there.

    Readers, what questions do you have about EIDL or PPP forgiveness? How are you planning on using your EIDL or PPP funds?

    -Jay @ RSG

    Earn up to $20 an Hour with Postmates!

    postmates-iconPostmates is growing like crazy right now and offers plenty of no-contact delivery options, from convenience store items, restaurant delivery and more. Sign up here.

    Quick links:

    • Follow all of our latest videos on driver unemployment, funding and more on YouTube here
    • EIDL & PPP: you can’t use the funds you’ve received for the same things, so be careful!
    • Additional funding through PUA is expected to run out by the end of July, and unless Congress agrees to more funding, drivers unemployment could be cut drastically
    • Check out these ways on how to make money quickly
    Jay Cradeur

    Jay Cradeur

    Jay Cradeur, a graduate of the Haas School of Business at UC Berkeley, is a full-time driver with over 26,000 rides. Jay has a driver-focused podcast: Rideshare Dojo with Jay Cradeur. When Jay isn’t writing articles or making videos, he is traveling the world. You can see what Jay is up to at www.nomadjay.com.

    Share Post