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PPP Forgiveness & Self-Employed Guidance

So much has happened in the last 2 months. It's been a crazy ride and a roller coaster for many people and businesses. There is still a lot of uncertainty with where we go from here, what does the "new normal" look like for a bit, etc. I do want to take a minute though and applaud each and every one of you that have taken this time to work on yourself or your business. I have 100% slacked on writing blog posts during these 8 weeks because we've had so many people reaching out to us for both guidance through this time and repositioning themselves for beyond. It's been encouraging to see people making the most of the situation and the attitude they have towards it and their business.

With all of that being said, I thought I'd mention a few thoughts about the PPP loans that we have been seeing a lot questions about. It seems as though we're through the majority of the application phase for the PPP loans and now moving into the usage and forgiveness portion.

The 1st piece of advice I would give to anyone who has received PPP funds is to keep the funds in a separate account and transfer over money for your qualifiable expenses (payroll, rent, utilities, interest bearing loans) as needed for the exact amount of each expense. This will help track what the money was used for and helps keep a paper trail for each expense. This will help cover yourself if they try to question what the funds were used for.

The 2nd thought is about how to deal with this on your Profit and Loss statement. At the time of this writing, the IRS is not allowing any qualifiable expenses that will be forgiven from your loan to be deducted on your expenses. Since the loan itself isn't considered taxable income, the expenses associated with it are not deductible. While I personally believe the logic behind this makes perfect sense, this is going to be a nightmare and a headache for tracking purposes for your accountant or whoever does the books for your business. If anything changes with this, we will try to update this blog to the latest information.

The last thought I have is regarding the forgiveness process. And to be perfectly honest, I have no idea what to prepare people for with this. The SBA and government have done a fantastic job throughout this whole process of kicking the can down the road and then re-kicking it further down the road. I know the forgiveness process is going to be the same thing. I am hearing that for self-employed people with no employee's your forgiveness will be automatic up to 8/52 of your 2019 schedule C income. While that doesn't answer the part about what if you have other qualifiable expenses, it would help streamline some of the process for banks and the SBA. All I can advise right now is to keep good documentation for everything, pray that they find a way to simplify and streamline the system, and be thankful that you received the funds to help weather this storm.

As we get to that phase and start seeing more guidance on forgiveness and how it is working we will do our best to keep everyone updated and provide as much insight as possible. Regardless, we will all get through this together!

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