Written by Eleanor M. Lackman and Craig C. Bradley

Music industry associations and trade groups, working alongside organizations spanning the creative industries, scored a major victory in securing financial help under the CARES Act (the “Act”) for musicians, music producers, and other music industry workers affected by the COVID-19 pandemic. This relief falls into two categories: (1) unemployment compensation expanded from traditional employees to include benefits previously unavailable to independent contractors, “gig” workers, and the self-employed, and (2) newly-available loans through the U.S. Small Business Administration (SBA), including loan advances of up to $10,000, which are now also available to sole proprietors, independent contractors, and the self-employed.

The private sector has also stepped up to help. Hundreds of grants and assistance programs are being offered by companies and non-profits, including Facebook and a plethora of music-centric organizations of all stripes. Lists of such organizations can be found at Billboard and at https://musiccovidrelief.com/.

Unemployment Compensation. The new unemployment compensation the Act funds will be administered by states, so applications will be made through state unemployment agencies. Specific application information is to be found on states’ websites and through the U.S. Department of Labor’s CareerOneStop site here. In addition to expanding unemployment compensation to include independent contractors, “gig” workers, and the self-employed, the Act provides for $600 per week in federal unemployment compensation available to self-employed individuals and independent contractors for up to 39 weeks, and $600 per week on top of state unemployment benefits to others. The Act also extends unemployment benefits for employees for an additional 13 weeks beyond what is authorized by the individual states.

Also, importantly, this unemployment compensation is available whether or not individuals are being sent $1,200 stimulus checks ($2,400 for married couples) under the Act — that is, individuals with an adjusted gross income up to $75,000 (or up to $150,000 for married couples who filed joint tax returns).

Loans Through the SBA. The Act also funds loans under the Paycheck Protection Program (PPP), which are applied for through SBA-approved lender banks. (The SBA’s informational site with full details can be found at SBA PPP.) These loans are intended to cover two months of payroll and other business costs (up to $10 million), with limits on what the funds can be used to pay. PPP loans are set to mature in 2 years, and will be forgiven if, among other requirements, businesses retain employees at their pre-pandemic salary levels. If not forgiven, the interest rates are set to be extremely low (1% as of this writing). There also are perks, including no application fees and deferred repayment for 6 months. Many banks have announced they will begin by processing loans for existing accounts, and funding is on a first come, first serve basis.

Again, these PPP loans are available to sole proprietors, independent contractors, and people who are self-employed, but those applying want to keep in mind applicants cannot obtain a PPP loan and another loan for the same purpose, although if you have recently taken out an Economic Injury Disaster Loan or EIDL (see SBA EIDL for more details) relating to the COVID crisis, it may be possible to refinance it as part of a PPP loan.

Applications were officially set to open on April 3 for small businesses (under 500 employees) and sole-proprietors, and April 10 for independent contractors and the self-employed, but things seem to be changing daily (if not hourly!), so be aware of potential date changes. Also, SBA has stated the PPP program will be available only through June 30, 2020.

Further, advances up to $10,000 are available under the EIDL program, which are intended to be distributed within “days” of application. These loans are available up to $2 million and are slightly more flexible than PPP loans in terms of for what the money can be used. Again, see SBA EIDL for more details.

One potentially significant question for music industry workers is how these various programs overlap: if you apply for unemployment compensation as an independent contractor, can you also apply for a PPP loan as someone who is self-employed? There is no official guidance from the federal or state governments yet on this issue, and the answer likely depends on a few factors — such as whether you have incorporated and pay yourself or anyone else as employees, and variations in states’ unemployment laws. Another important consideration is that, unlike PPP or EIDL loans, unemployment compensation will not have to be paid back under any circumstances. So, separate from the legal issues involved, music industry workers should consult with their banker and their accountant to determine whether and how to best take advantage of the available options.