I went to double check, and you are correct, one the statements that you are asked to initial in the government-issued paper application, is,
Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.
Depending on your circumstances, this may or may not be true, and therefore, agreeing may or may not be a lie.
I’m going to add a note about in the main post.
I AM NOT A LAWYER.
When I read that sentence, these are the things that strike me, in order.
1. The word “necessary” seems like a knock-down: I have savings, these funds are not strictly necessary for me (the person Eli Tyre).
2. But it also says “current economic uncertainty.” That is to say, I’m applying for money because I don’t know what’s going to happen over the next few months. That is true, in so far as I don’t know how long this disruption will last, and how long my savings will hold out. If I ran out of money to pay rent, then I would have to figure something out, which would probably involve ceasing some of my current activities to do something that gives me income.
Does that mean that the economic uncertainty does make these funds necessary? My first order answer to that is the key question is “would 2.5 months of income make the difference between continuing doing the work I’m doing and finding income somehow?” I think that that is pretty unlikely. I have more than 2.5 months of runway.
3. But maybe most importantly, there’s the phrase “the ongoing operations of the Applicant”: What are the ongoing operations of the business entity “Eli Tyre”?
Well, for instance, I contract-teach at CFAR workshops. I won’t be doing that in the near future, regardless (because this is not a season for putting 50 people from all over the world in a house together for 4.5 days). The “Eli Tyre” entity is definitely going to miss the income that would come from those activities.
Naively, I might compare that situation to a restaurant or tailor, who is not getting any business right now, because their would-be-customers are sheltering at home. They probably still have expenses to pay, particularly payroll expenses, and that is exactly what this situation is supposed to cover. What is my equivalent of “payroll expenses”? Well, (effectively) the “Eli Tyre” business entity pays the individual Eli Tyre, gross revenues minus expenses. Does that mean that paying myself is one of the ongoing activities of the business entity “Eli Tyre”? I think, in that Sole Proprietors and Independent Contractors can apply at all, the answer is “Yes.”
A lot of this is kind of confused because I’m forced to make a pretty artificial distinction between the unincorporated business entity “Eli Tyre” (that’s why “the Applicant” is capitalized) and Eli Tyre the person.
It seems additionally confused by the fact that I have ceased much of my usual (paid) economic activity in order to do pro-bono work.
I guess I should talk with a lawyer.
Or do any of you have legal expertise?
I second the request for a lawyer. Whether or not I apply for these funds depends on what I think the legal interpretation of that passage is.
Not a lawyer, repeating the words of someone else who’s not a lawyer.
I talked to my bank (a 3 state credit union) today, specifically asking whether I counted as my own employee. The representative implied the SBA itself didn’t know, and if they did they hadn’t shared the information yet. She also very strongly implied that as long as I filled out the forms in good faith and my supporting documents were accurate, I would not be punished for fraud.
But what does it mean to fill out the forms in good faith? Doesn’t that depend on whether or not I think I’m lying? And doesn’t that depend on what words like “current economic uncertainty renders… necessary to continue current operations… ” mean? Like, obviously I could use the money. But is it necessary? I do have savings, so it seems like I could continue operations for a while just fine without extra money...
I recommend that you apply ASAP, talk to a lawyer, and then decline the funds if it seems like you shouldn’t have requested them in the first place. There’s a very limited window for getting money (which might already be passed). When actions are reversible (which they certainly are in this case, given that it is a loan, by default), but time sensitive, bias in favor of action.
But I recommend that you follow your moral compass over and above following my advice.