Here’s the latest…
PPP FORGIVENESS PROCESS AND HELP
The SBA is making the process for receiving forgiveness for your PPP loan unnecessarily difficult for small businesses at a time when small businesses are reeling from the pandemic and now are facing potentially longer closures due to civic unrest. They could have easily created a simple form and formula for the smallest loans—perhaps under $50,000 or $100,000—but they chose not to. Treasury Secretary Mnuchin had the authority to extend the 8-week period to expend the money for forgiveness, but he chose not to. So we plow ahead and try to make this work.
Forgiveness strategy: Retirement funding
Remember, retirement contributions count towards ‘payroll costs’ and are not included in the $100,000 salary cap. If you have an existing company retirement plan and you might otherwise be short of your ‘payroll costs,’ make sure you are funding your retirement at least 8 weeks’ worth of a normal year’s contribution.
BAD NEWS, however. If you are self-employed and not incorporated, the SBA is not allowing you to include retirement contributions as part of “payroll costs.” This is an entirely arbitrary decision of this Administration.
Applying for forgiveness
If you received a PPP loan, it’s time to start working on your forgiveness process as your eight week forgiveness period is probably soon coming to a close. Remember, you will file for forgiveness with the bank who gave you the PPP loan. While they’ll have to follow SBA rules, hopefully they’ll be more realistic in what they require than the SBA seems to want.
Go here for the PPP forgiveness application. Be sure to look at page 10 for the documentation you’ll need to provide or keep, including:
- for direct payroll costs—bank account statements or payroll records AND tax forms
- for health insurance, retirement plans—cancelled checks, account statements, or receipts
- for rent—lease agreement AND cancelled checks or receipts OR lessor account statements
- for utilities—invoices and cancelled checks or receipts OR account statements
Employer businesses
If you have employees, you have to demonstrate what percent of your employees you’ve retained to get forgiveness. There’s a whole lot of computation you need to do to get full forgiveness. I’ve given a couple of links below (as well as the application above) to help.
Forgiveness calculators/spreadsheets
AICPA Loan Forgiveness Calculator: Designed for accountants, this may be more complicated than most small businesses want or need. Go here.
From payroll provider ADP: Be sure to click on the little (i) information buttons for more information when filling out the form. Go here.
LEGISLATIVE UPDATE
Let me start by saying: NOTHING NEW HAS BEEN PASSED YET but help is on the horizon.
- Good news: The House passed a bill with wide bipartisan support (only 1 vote against) that would extend the PPP forgiveness period providing up to 24 weeks to spend the PPP funds and lowering the requirement that at least 75% must be spent on payroll costs to 60%. If any portion of the loan is not forgiven, you would have 5 years instead of 1 year to pay it back—at 1% interest.
- Good news: Senate Majority Leader Mitch McConnell said instead of the Senate pursuing its own bill, he would fast track approval of the House bill. Ideally, that will happen this week.
I will send an announcement/update if this is passed and signed—but keep watching the news.
WHAT’S GOING ON IN AMERICA NOW
I know that right now you are dealing with just trying to ensure that your business can survive the impact of Covid-19. But we are at a turning point in America, and small business owners are some of the most respected members of their communities. Your voice and your actions have weight.
America has been thrown into another major crisis sparked by another horrific incident of police killing an unarmed African American. This is just the latest in a string of police killings of unarmed black victims. Peaceful protesters have taken to America’s streets to demand justice. Others have used this moment to vent their anger, turning to destruction and looting. All too often, it is small businesses that are the unintended victims of such destruction. That makes us all angry, and afraid.
But boarding up the windows of your small business or getting a security camera or even getting a gun won’t make you safe. The only solution to injustice is justice. We must stay focused on what is truly broken in American life: not just police brutality, but entrenched racism in every aspect of American life; increased economic inequality that makes upward mobility almost impossible for those at the bottom; a lack of opportunity for people of color to access quality education, health care, housing.
We all brag that America is the greatest country in the world. But it is not great if it is only great for some. If we want America to be great, America must be fair and just. This is a problem all of us must demand be solved. We must speak up. We must demand accountability for those who abuse power. We must work for equal opportunity for all. And in November, all of us must vote—vote for leadership that works for a just and fair America, an America that works for everyone, not just those at the top, for leadership that works to bring us together not intentionally drives us apart. Your voice matters. #BlackLivesMatter
FACEBOOK LIVE EVENT TODAY
Please join me for my Facebook Live event:
Today, Tuesday June 2, 1pm EDT/10am PDT
Update on PPP forgiveness strategies and resources and a chance to discuss how small businesses can respond to the current crisis of racial injustice and community unrest. Go here to join or to watch later.
And if someone forwarded you this newsletter, you should sign up here.
MARK YOUR CALENDARS
June 9 I’ll be the guest on a Verizon webinar on Money: how to find it, manage it, make the most of it in the new reality. Watch here.
Copyright Rhonda Abrams, 2020
