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PPP Question - how bad do things need to be?
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amother




OP
 

Post  Thu, May 14 2020, 4:36 pm
DH (and me) are self-employed, in an industry that is not doing THAT terribly compared to others. However, this quarter we are making 30% less than the same quarter last year, and 20% less than last quarter. (A chunk of our work is seasonal.)

Should we still apply for PPP? Technically we don't need the whole amount, but we could definitely use that level of cashflow.

(We would probably just take it as a loan, not apply for forgiveness.)

Anyone know, or know who I could ask?
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hodeez




 
 
 
 

Post  Thu, May 14 2020, 4:44 pm
3475892822, HYS tax firm does free consultations. He also has a YouTube page with a bunch of videos about corona related relief
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amother




Lemon
 

Post  Thu, May 14 2020, 7:13 pm
What? Why would you not take money you could get, if used for the proper purpose, and use it? Why would you pay it back?!

I was under the impression that it is a "loan" because they want you to use it specifically for mostly payroll, to keep the economy going. If you do that, you don't need to pay it back.
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amother




OP
 

Post  Thu, May 14 2020, 7:29 pm
Because we technically CAN pay ourselves, just 20%-30% less. We are tightening our belts, but B"H at this point it does not look like we will shut down without assistance.

So first of all I'm not sure if we should be getting it at all (morally), and even if we do get it, I don't think we could meet the "75% to payroll" criteria for forgiveness, unless we dramatically increase our income (which feels a little odd under the circumstances). Even as a loan it would be tremendously helpful, but again we technically don't NEED it.

So I'm not sure it is the "right" thing to do.

(I get really uncomfortable when things don't feel like yosher, but I don't need to be overly frum either, especially if my my family would benefit from getting it.)
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amother




Olive
 

Post  Thu, May 14 2020, 8:00 pm
Some accountants are suggesting that not all loans will be forgiven if there wasn't enough need. So if you do get the loan and can manage without using it by tightening your belt, hold onto it and don't use it in case you need to pay it back. You still need to pay attention to 75% of the amount loaned going to payroll to have the best chance at being able to keep it.
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amother




Copper
 

Post  Thu, May 14 2020, 8:19 pm
amother [ Olive ] wrote:
Some accountants are suggesting that not all loans will be forgiven if there wasn't enough need. So if you do get the loan and can manage without using it by tightening your belt, hold onto it and don't use it in case you need to pay it back. You still need to pay attention to 75% of the amount loaned going to payroll to have the best chance at being able to keep it.


As of yesterday the SBA put out new FAQs that state otherwise. In short, they made it clear that they will not scrutinize people who took out loans less than 2 million dollars. If you want to look it up google "Safe Harbor PPP".
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amother




OP
 

Post  Thu, May 14 2020, 8:22 pm
Like I said, we would plan to pay it back, as I'm not sure we could meet the criteria. A loan at 1% interest is nothing to sneeze at.
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amother




Cobalt
 

Post  Thu, May 14 2020, 9:02 pm
Either take it and use it as prescribed, or don't. I don't think you're winning anything by taking it and using it as a loan. Especially as funding is limited.

Also, 75% payroll is completely doable because the loan amount is based on payroll. It's 2.5x for average payroll. So 75% is regular 8 week payroll.

Alternatively, see if there are tax credit alternatives that can help you. There are for business that have employees (ie file a 941).
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amother




OP
 

Post  Thu, May 14 2020, 9:05 pm
Apparently, as of a few days ago, there was $40 billion left.

If I take it for payroll, but we are still making income, how does that work? Again, we are self-employed, and therefore our income fluctuates. Do I take it as a bonus?
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amother




Copper
 

Post  Thu, May 14 2020, 9:11 pm
amother [ OP ] wrote:
Apparently, as of a few days ago, there was $40 billion left.

If I take it for payroll, but we are still making income, how does that work? Again, we are self-employed, and therefore our income fluctuates. Do I take it as a bonus?


There is actually 120B left -
https://www.forbes.com/sites/m...../amp/

Is doesn't matter if you're still working now. Take it.
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amother




Cobalt
 

Post  Thu, May 14 2020, 9:23 pm
amother [ OP ] wrote:
Apparently, as of a few days ago, there was $40 billion left.

If I take it for payroll, but we are still making income, how does that work? Again, we are self-employed, and therefore our income fluctuates. Do I take it as a bonus?


Pay yourself from that money. You need to show that you used money for payroll (75%), rent/mortgage, utilities (and something else?) Over 8 weeks. No reason you can't make more profit over that.

I don't know your finances. But if for income is 20-30% less for the indefinite future, consider taking it as a cushion.
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amother




Mistyrose
 

Post  Thu, May 14 2020, 10:06 pm
OP, the question is how do you pay yourself? Do you run a regular payroll? If so, then it's really simple. 75% will be for payroll because the loan is only 2.5 times your monthly payroll. The other "half a month" you can return (with 1% interest) or use for rent and Utilities.
If you just take draws and your income is then reported on a K1 or Schedule C, then your average monthly payroll is your 2019 net self employment income divided by 12. If you're in this situation then all my research told me that you can only pay yourself 8 weeks worth of your 2019 net income. So you'd take your net self employment amount (from k1 or schedule c) and divide by 52 x 8.
For both scenarios you will meet your 75% (unless you also have employees which you laid off).
Please note that I wrote "self employment" income because passive income is not eligible for the PPP loan.
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amother




OP
 

Post  Thu, May 14 2020, 10:26 pm
This is self-employment, Schedule C.

I'm trying to understand though. We usually bring in (for example) on average $6,000 a month. Due to the situation, we are bringing in on average $4,200 a month.

But our income can fluctuate wildly. One month we bring in $3,000, the next $9,000.

If we get PPP, then what happens? We continue making about $8,400 for the next 8 weeks, but now we also have $12,000 of PPP money. Usually we take any surplus for ourselves, after taking care of business expenses (which are pretty low).

So do we leave that $8,400 for later business expenses during the year and only take $12,000 for income, take it as a "good month" and make a higher salary of $20,000, or only are able to claim $3,600 as payroll, and then return the loan at 1% interest?
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amother




Tangerine
 

Post  Thu, May 14 2020, 11:00 pm
My husband and I are both self employed. I'm in an "essential" business so still working but his entire industry was completely shut down and he was the primary breadwinner. We're only making it by using some of our savings (next year seminary tuition fund so that may not happen now :-( ) He applied for and just got the PPP a few days ago but were told it can't be used for "back pay" so we can use 25% for certain expenses but have to wait until the end of the month to take a draw into our personal account. We think. No one really knows how it works when you're self employed. The accountant said he's just guessing at this point.
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amother




Copper
 

Post  Thu, May 14 2020, 11:04 pm
amother [ OP ] wrote:
This is self-employment, Schedule C.

I'm trying to understand though. We usually bring in (for example) on average $6,000 a month. Due to the situation, we are bringing in on average $4,200 a month.

But our income can fluctuate wildly. One month we bring in $3,000, the next $9,000.

If we get PPP, then what happens? We continue making about $8,400 for the next 8 weeks, but now we also have $12,000 of PPP money. Usually we take any surplus for ourselves, after taking care of business expenses (which are pretty low).

So do we leave that $8,400 for later business expenses during the year and only take $12,000 for income, take it as a "good month" and make a higher salary of $20,000, or only are able to claim $3,600 as payroll, and then return the loan at 1% interest?


The amount that is going to be forgiven of your loan will be 8/52 of line 31 of your 2019 schedule C. It doesn't matter how much you are making on top of that. To make it simple at the end of every week pay yourself to your personal account from your business account. Nobody is going to ask you what you did with the money you paid yourself or which money you used. (Yes, you'll put aside money for later. It's ok. They knew some people were going to be making money off the PPP but it's still worth it for them to keep the economy running.)

IF you end up getting forgiven a number that is less than you had anticipated you'll pay the difference back then.
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amother




Mauve
 

Post  Thu, May 14 2020, 11:09 pm
I took out a small PPP loan which does pay my payroll BH. I've been paying my employees, but definitely have less income the last few months. I applied later because I was also unsure if I should apply and rather tighten my belt but BH I decided to apply because it has allowed me to pay my two employees. I don't know how it would work for self employeed if you are not on payroll - have you asked an accountant?
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amother




Copper
 

Post  Thu, May 14 2020, 11:12 pm
amother [ Tangerine ] wrote:
My husband and I are both self employed. I'm in an "essential" business so still working but his entire industry was completely shut down and he was the primary breadwinner. We're only making it by using some of our savings (next year seminary tuition fund so that may not happen now :-( ) He applied for and just got the PPP a few days ago but were told it can't be used for "back pay" so we can use 25% for certain expenses but have to wait until the end of the month to take a draw into our personal account. We think. No one really knows how it works when you're self employed. The accountant said he's just guessing at this point.


No you can use it now! Not sure why you were told that. (Imagine you had employees, they would not appreciate being told to wait till the end of the month! In this case he is the employee.) Not sure why you'd trust me but please do more research. I've been researching this like crazy since Pesach.

Youre right it can't be used for backpay but you should apply for retroactive PUA for the weeks when your husband was out of a job until you got the PPP funds. Then after the 8 weeks he should reapply for unemployment unless he begins work.
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amother




Mauve
 

Post  Fri, May 15 2020, 6:53 am
amother [ Copper ] wrote:
No you can use it now! Not sure why you were told that. (Imagine you had employees, they would not appreciate being told to wait till the end of the month! In this case he is the employee.) Not sure why you'd trust me but please do more research. I've been researching this like crazy since Pesach.

Youre right it can't be used for backpay but you should apply for retroactive PUA for the weeks when your husband was out of a job until you got the PPP funds. Then after the 8 weeks he should reapply for unemployment unless he begins work.


I don't understand. I paid my workers April payroll knowing that I would be probably getting the PPP loan in May. You're saying since I got it in May I need to leave the monney in my account untouched until I pay my workers?
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amother




OP
 

Post  Mon, May 18 2020, 12:50 pm
Updating to share that I did apply (and was approved) through Kabbage.
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amother




Gray
 

Post  Fri, May 22 2020, 12:20 am
Derailing this thread a bit because I have been hearing that everyone and their mother who owns a business or are self employed applied for PPP loans, even if they were theoretically okay without it. Our very conservative accountant said we shouldn’t apply because we were bh able to make payroll etc without it (essential business) and we have to be prepared to honestly answer all the questions. We did lose business but gained in other areas and our expenses are lower so it sort of evened out. Would you apply in my case? DH thinks it’s not completely yoshar, I feel like we are entitled to govt benefits just like the rest of them...
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