How Yoga Teachers Benefit Under the CARES Act – New Economic Stimulus Helps Both Teachers and Yoga Studios
The Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act passed on March 27 is the largest aid package in this country’s history.
For yoga teachers and studios, who have had to close their doors as a result of the COVID-19 crisis, the aid package couldn’t have come a day later.
And fortunately, there’s good news. There are a number of ways the CARES Act can benefit yoga teachers, as long as you have been a yoga teacher with a regular income over the past year.
The big news is that even if you were categorizing your teaching income as an independent contractor or self-employed, the new law includes new types of unemployment benefits for contractors, freelancers, self-employed workers as well as other professionals who in the past have not qualified for standard unemployment coverage.
The benefits differ according to whether you received your yoga teaching income as an employee or as an independent contractor. Here are the rules for each:
Teaching Yoga as an Employee? You May Qualify for The Pandemic Unemployment Compensation (PUC) Program
If you were teaching yoga as an employee for the minimum required length of time, you are eligible to receive benefits under the Pandemic Unemployment Compensation program.
People filing under this program will receive the usual unemployment benefits from their state based on your previous income, plus an additional $600 per week in compensation through July 31, 2020.
The CARES Act also extends the usual length of unemployment benefits (usually 26 weeks) by an additional 13 weeks.
Yoga Teachers Filing as Independent Contractor or Self-Employed: You May Qualify for The Pandemic Unemployment Assistance (PUA) Program
The Pandemic Unemployment Assistance (PUA) was put in place to provide emergency unemployment assistance to people who do not qualify for regular state unemployment benefits.
The PUA program also extends the length of time you can receive unemployment to up to 39 weeks (from normally 26 weeks). The program expires on December 31, 2020, unless it is extended.
How Much Unemployment Benefits Do You Qualify for as an Independent Contractor?
The unemployment compensation under the PUA is based on the federal Disaster Unemployment Assistance program under the Stafford Act, which sets the maximum weekly benefit amount payable as that provided in the law for unemployment compensation in the state where you live (similar to PUC). The minimum weekly benefit payable is half (50%) of the average benefit amount in the state in which you apply.
If you qualify for PUA, you also qualify for the additional $600/week compensation under the PUC program through July 31, 2020, as well as the extended 13 weeks of unemployment coverage.
How to Apply for Unemployment Compensation under the CARES Act
To apply, find your state’s labor department and follow the directions there. You can find a link to your state in this Unemployment Benefits Finder.
If you are not eligible for regular unemployment benefits for employees, begin the standard unemployment insurance application process, and apply for Pandemic Unemployment Assistance as an independent contractor or self-employed.
To apply, you will need to certify that:
You are partially or fully unemployed or
Unable to work because of COVID-19 related circumstances, such as your place of employment is closed because of the COVID-19 pandemic
Curious about taking your yoga teaching online? Check out our free webinar: – Making the Most of Challenging Times: A COVID-19 Planning and Resource Guide for Yoga Teachers and Yoga Studios
How the CARES Act Benefits Yoga Studios and Freelancers
If you run a yoga studio or a company with employees, the CARES Act offers a way to avoid laying off people through the Paycheck Protection Program Loan Guarantee.
The Paycheck Protection Program
The CARES Act’s Paycheck Protection Program offers another source of help. Under this program, small businesses will be able to apply for a small business loan backed by the SBA through your local lender.
Who Qualifies for the Paycheck Protection Program?
Any small business with less than 500 employees qualifies. Notably, for yoga teachers, this includes sole proprietorships, independent contractors and self-employed persons, as well as private non-profit organizations affected by coronavirus/COVID-19.
Advantages of the Paycheck Protection Program Loan
Firstly, part of the loan is forgiven if it’s spent on qualifying expenses like payroll, rent, utilities or mortgage payments for your business within the first eight weeks. (At least 75% of the forgiven amount must have been used for payroll).
You can borrow up to 2.5 times your average monthly payroll costs for employees making under $100,000 during the 1-year period before the date the loan is issued. Expenses for paid sick leave, healthcare, and other benefits can be included as well in estimating the loan amount.
There is no fee for taking out the loan, and loan payments are deferred for six months. No collateral or personal guarantees are required.
The interest rate is low, possibly as low as 0.5%, and payments are deferred up to 6 to 12 months.
Part of this loan may be forgiven and not counted as income to you, if it’s spent during the first eight weeks on operating expenses.
The fact that you are applying through a local lender cuts out some of the red tape, and presumably will make it faster and easier to obtain the loan.
Be Sure to Read the Fine Print
For any loan obtained under the Paycheck Protection Program Loan to be forgiven, you have to fulfill the following conditions:
You must maintain the same average number of employees at the same salary levels. If you have already laid-off employees, you must rehire those employees (or someone else) to get the same average number of employees. Loan forgiveness will be reduced if you don’t fulfill these conditions.
The program is expected to be available starting April 3. To prepare your application, download this sample form to see which information will be requested from you.
How to Find a Lender for the Paycheck Protection Program Loan
You can apply through any SBA 7(a) lender or through any participating federally insured bank, credit union, or Farm Credit System. Lenders are still being enrolled in the program, so ask your local lender if it is participating in the program.
Lenders are expected to begin processing loan applications as soon as April 3, 2020. This will be a popular program and there is a cap on the total amount, so don’t delay if you’re interested in this program
Other Ways the CARES Act Benefits Yoga Teachers
Direct Stimulus Payments. Individuals earning less than $75,000 will receive a one-time direct deposit of up to $1,200, and married couples earning less than $150,000 will recive $2,400. If you have dependent children, you will receive an additional $500 per child.
Penalty-Free Access to Retirement Funds. The usual 10% early withdrawal penalty for retirement is waved for distributions up to $100,000, as long as they are related to the COVID-19 pandemic. You still have to pay taxes on any gains, but payments are spread out over three years, and you will have three years to redeposit the withdrawal.
The Loan Limit on 401(k) Loans Is Increased to $100K. Another way to access retirement money is to take out a loan from your 401(k). The usual cap of $50,000 has been increased to $100,000; you have to pay (your retirement account) a reasonable interest on the funds.
Delay of Payroll Taxes: Employers can delay the payment of their portion of the payroll taxes for 2020 until 2021 and 2022.
Write Off Net Operating Losses Against Previous Years. Should you end up with a net operating loss for 2020, the rules have been modified so you can write off 100% of losses and carry the losses back five years. In other words, you’ll get a credit from the taxes you’ve paid in the past to off-set current losses.
Curious about taking your yoga teaching online? Check out our free webinar:
– Making the Most of Challenging Times: A COVID-19 Planning and Resource Guide for Yoga Teachers and Yoga Studios