In light of the COVID-19 pandemic and how it has impacted the rideshare industry, Uber has partnered with fintech lender Kabbage to provide its drivers with a simpler application for Paycheck Protection Program (PPP) loans.
PPP loans are managed by the Small Business Administration. They are designed to provide a direct incentive to small businesses for keeping their workers on the payroll. Uber drivers are eligible for this type of loan because the company classifies them as independent contractors.
Currently, applications for PPP loans are open until June 30. Uber drivers who use the new applications will have certain Uber-specific information automatically filled in for them including, with their permission, their payroll information. According to Kabbage CEO Rob Frohwein, “[The application] helps streamline the process, which can be confusing or challenging if you don’t have a lot of familiarity with tax documentation.”
The first round of PPP funding ran out in less than two weeks. According to Fortune, $130 billion is still available for the second round as of June 9. For Kabbage, the PPP partnership program showcases its automated loan processing, which has enabled 90% of independent contractors across all fields to have a completely automated application experience. So far, the company has originated more than 143,000 loans totaling more than $4.15 billion. The average loan size is $29,000.
Uber encouraging its drivers to take out PPP loans has complex implications. While legislators and activists, especially in California, have targeted the company for allegedly misclassifying its drivers as independent contractors. As a result, drivers are not eligible for most benefits and don’t pay into traditional unemployment insurance.
According to a senior researcher at the think tank Data & Society, Uber promoting PPP loans to drivers reinforces Uber’s idea that drivers are entrepreneurs as opposed to misclassified employees: “Uber’s constantly trying to make the case that drivers prefer to be independent contractors. [PPP loans] might not have much bearing in a labor law dispute, but it could be persuasive in the court of public opinion.”
It’s important for Uber drivers to understand that applying for and receiving a PPP loan could disqualify them from receiving the temporarily expanded unemployment benefits through the CARES Act.
To learn more about the impact the coronavirus pandemic has had on the rideshare industry, check out our blog. To request legal information regarding an Uber or Lyft accident, schedule a free case evaluation with the Rideshare Law Group today.