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2021 Update to PPP loans and Employee Retention Tax Credit

During the January 5th Small Business Update, U.S. Chamber of Commerce executive vice president and chief policy officer, Neil Bradley, discussed the recently-passed  $900 billion coronavirus stimulus bill in more detail. Below is a breakdown on what to expect from the Employee Retention Tax Credit (ERTC), second draw PPP loans, Economic Injury Disaster Loans (EIDLs), and new live-venue grants.

Do you qualify for the Employee Retention Tax Credit?

Back in March 2020, the CARES Act included the ERTC as an option to businesses looking for financial relief. However, companies had to choose between taking a PPP loan or the ERTC in the original bill. 

This stipulation has now been lifted in the new bill, allowing companies to take advantage of both ERTC and PPP. The ERTC has also been expanded for 2021 so that in the first and second quarter of 2021, employers that meet the eligibility can receive a tax credit for up to $14,000 per employee. 

Many businesses may now also qualify for smaller credits that were offered in 2020, which are worth a maximum of $5,000 per employee. 

“If I have one takeaway, it’s to pay attention to this tax credit,” Bradley said. “Small businesses had to choose between taking a PPP loan or getting the Employee Retention Tax Credit. A lot of people gravitated toward PPP because, frankly, it was a better deal. Congress has removed that prohibition about taking advantage of both. So now, if you took out a PPP loan in 2020, you can take advantage of the ERTC in 2021 and may be able to apply part of it looking backward for 2020. This is a more generous opportunity than what was originally in the CARES Act.”

Additionally, the Employee Retention Tax Credit is both refundable and advanceable for businesses who qualify. This means potentially having the ability to get the tax credit back early in the form of a check.

“The IRS sends you a check for the difference between what you would have paid in taxes and the eligible tax credit,” Bradley said. “Importantly, you can apply to receive an advance on this tax credit, which can help with cash-flow issues.”

Businesses should talk with their tax preparers and payroll companies immediately to see if they can take advantage of the expanded ERTC.

You might be interested: How to request forgiveness for PPP sole proprietor

When to expect new PPP, EIDL grant and live venue grant applications 

The new stimulus bill was signed into law on December 27, so now in the new year many businesses are now wondering when they can expect applications to be available. 

For PPP, businesses should be in touch with lenders so they can be ready to submit applications as soon as they are accepting them. For EIDL grants and live venue grants, companies should look for new portals on the Small Business Administration’s website.

The “second draw” PPP program is much more targeted

The new second draw PPP program is more targeted this time around. Businesses and nonprofits with fewer than 300 employees that have exhausted their first PPP loan and have seen a reduction in revenue of 25% in a single quarter of 2020 should be eligible.

“The second draw PPP is really an opportunity for the hardest-hit small businesses to get another loan that can also be forgiven,” Bradley said. “If your business is only off 5%, you don’t qualify for the second PPP even if you qualified for the first.”

For more about PPP and the changes in the coronavirus relief bill see the U.S. Chamber’s Updated Guide to Small Business COVID-19 Emergency Loans.

regain our power

2020 Hispanic Heritage Month: Hermanas, time to regain our power

Dear hermanas, this 2020 Hispanic Heritage Month, it is time to regain our power!

As mothers, daughters, sisters, most of us carry the burden of our families, looking after our children, caregiving for our families and relatives, and making sure everyone has a roof over their head and food on their table. Now, we call you to step up and regain our power to take care for our Latinx community. Are you with us? 

Latinas in Business Inc. will be turning 6 years old. We launched our initiative in a time of HOPE, and CHANGE we could believe in. We knew we were GREATER TOGETHER because we were BETTING IN AMERICA.

Unfortunately, in the last four years, we have seen our American Dream vanished, our Latino community bullied, and now we are living the loss of our loved ones due to this horribly handled pandemic by the Federal Administration.

regain our power

Photo credit: Kalea Morgan Unsplash

As a non-profit organization, we do not proclaim or endorse any political candidate or party. However, we are calling YOU to regain our power, our Latino power. We are encouraging you to take the bull by the horns, to step up and to say enough is enough.

In many conversations, I hear people saying, “I hate politics,” or “I’m not into politics,” or even, “politics is dirty or corrupt.” All these statements might be true but when you do not want to get yourself involved in YOUR OWN AFFAIRS, in the everyday events that are affecting your life, your family and your future, then, AMIGA, we have a problem.

Politics is a word from Greek: Πολιτικά, politiká,  that meant ‘affairs of the cities’ -according to Wikipedia.  The Greeks used to get associated to make decisions in groups, and to define the power relations between individuals for distribution of resources and representation in society.

So, if you don’t get political, and take charge of making decisions about resources and representation,  how much power do YOU have left?

We have to talk “sin pelos en la lengua.” We cannot “dejar que nos pasen por encima” or “lavarnos las manos.” We have to “ponernos los pantalones” and to get into action YA to regain our power!

COVID-19 crisis “sin pelos en la lengua”

Tyson Foods installed protective plastic divisions between workers to prevent spread of coronavirus (Photo Courtesy Tyson Foods)

  1. Have you or someone in your family, relatives or friends have faced this terrible disease? Do you feel it was in your power to prevent or avoid that death or illness?

Due to COVID-19, 194,000 people have died in the US and other 6.5 million people have become ill with the virus, without knowing the long-term consequences of the disease. Following misleading information from the Federal Government, the disdain of many made the virus a political flag, and little or no resources were offered, especially in minority communities. As usual, inequality takes its toll in our “hermanas” y “hermanos.”

“For low-paid employees whose work is rarely if ever glorified — the people who clean the floors, do the laundry, serve fast food, pick the crops, work in the meat plants — having the jobs that keep America running has come with a heavy price. By the odd calculus wrought by the viral outbreak, they have been deemed “essential.” And that means being a target. Along with blacks, Latinos have borne the brunt of the COVID-19 pandemic in California and other parts of the United States, becoming infected and dying at disproportionately high rates relative to their share of the population. Health experts say one of the main reasons Latinos are especially vulnerable to COVID-19 is because many work in low-paying jobs that require them to leave home and interact with the public,” said the LATimes.

Sign this petition to both Houses of Congress: Protect Latinos and other Minority Essential Workers Dying from COVID-19.”

 

You might be interested: Poultry farms and Latino workers at the forefront of COVID-19

 

regain our power

Photo credit: Dan Burton – Unsplash

  1. Have you lost your job and you are waiting for financial help from the Federal Government? Is it in your power to find a new job and restart your life? Do you have the power to turn the table around and provide for your children?

Since the pandemic began, 69 million people are facing poverty, hunger and despair, a situation that couldn’t have been prevented such as other countries did. If you are one of them, you lost your job, or you are facing eviction, or simply do not know how to feed and sustain your family. Moreover, many people have lost their health insurance due to the loss of jobs.

According to Reuters, the largest increases of jobs shed were seen among Asians and Latinos. In the beginning, both Whites and African Americans saw their rates rise at the same pace as the national rate, although the unemployment rate now for blacks – at 6.7% – is 65% higher than for whites at 4%.

The leisure and hospitality sector -a sector where many Hispanics work- shed 459,000 jobs – 65% of all the positions lost in March. The largest share of that came at restaurants and bars, which slashed 417,000 jobs.

Sign this petition to both Houses of Congress: “Request additional financial assistance for families who lost their jobs by no fault of their own”

 

deportations

Photo credit: Nitish Meena-unsplash

  1. Has any member of your family have been deported? Are you a DREAMER holding your breath to know if your life will be able to continue in this country?

In addition to hundreds of thousands broken families, the economic costs to American society from mass deportations are in disproportion to the economic benefits that Latinos bring to the US economy.  While direct costs to taxpayers is about $70 billion in enforcement agents, detention facilities, immigration judges and transportation,  the Center for American Progress estimates that approximately $4.7 trillion is lost in economic productivity,  nearly a trillion dollars in lost tax revenue over the next decade, while the conservative American Action Forum calculates some $2.6 trillion in lower GDP over 10 years, according to Unidos US.

The increase in apprehensions has come as a growing number of migrants seek asylum. The demographic profile of those crossing the border has changed, too: People traveling in families, not single adults, accounted for the majority of those apprehended last year (56%). And most of those apprehended were from El Salvador, Guatemala and Honduras, countries that have struggled with violence and a lack of economic opportunities.

Sign this petition to both Houses of Congress: “Stop massive deportations that hurt the regional economies and break immigrant families that are looking for asylum from violence and lack of economic opportunities.”

 

children in detention, regain our power

Demonstration in Elizabeth NJ (Photo credit Chris Boese -unsplash)

  1. Do you think it is fair to have our Latino children in cages, although it is known that being held in detention can be traumatic for children, putting them at risk of long-term physical and emotional damage? Do you feel you have the power to prevent or help these children find a happy return to their families of origin?

Last year, the government reported there were 69,550 migrant children held in government custody, enough infants, toddlers, kids and teens to overflow the typical NFL stadium. Over all, about 2,500 immigrants in ICE detention have tested positive for the virus.

A spike in detention of migrant children crossing the U.S. southern border and separated from their families is threatening to overwhelm the systems set up to care for them. It has also reinvigorated debate over the detention of minors.

The Trump administration has called the influx of asylum seekers—both adults and minors—a “national security threat.” Critics, including many in Congress, say the administration’s response is exacerbating a humanitarian crisis in Central America, breaking U.S. law, and violating international human rights norms, according to The Council on Foreign Relations.

Sign this petition to both Houses of Congress: “Free ALL children held in detention centers or deportation hotels who are victims of abuse and negligence.”

 

business closed, regain our power

Photo credit: Kelly Sikkema-unsplash

  1. Are you at risk of losing your business? Do you feel empowered to prevent or avoid the closure of your business? Do you think you have enough tools and resources, and financial support to survive a situation that is out of control, and could have been prevented?

Hispanic immigrant business owners face significant exposure from the coronavirus-induced economic downturn. They accounted for 51% of all Hispanic-owned businesses in 2016, shares similar to the percentages of Hispanics who are immigrants. They are now closing their businesses at a staggering rate.

Historically, there are racial and gender inequalities in business ownership. Nationally, people of color represent about 40% of the population, but only 20% of the nation’s 5.6 million business owners with employees. The U.S. could have millions more businesses if women and minorities became entrepreneurs at the same rate as white men.

Now, with the COVID-19 crisis, millions of “missing businesses,” are facing a massive potential disruption and some risk permanent closure. However, for the Federal Administration and Congress, there is not the same urgency to address COVID-19’s impact on minority-owned small businesses. It has already been established and built up over decades that these business DON’T COUNT, reflected in the lack of access to capital and resources.  However, it is also established that closing these disparities would result in the creation of millions of new small businesses and bridge the gap in unemployment and the economy.

You might be interested: NJ Sen Menendez pushes bipartisan Paycheck Protection Small Business Forgiveness Act

US Senator Menendez, who proposed a bi-partisan legislation for automatic forgiveness of small businesses’ PPP Loans said, ““Struggling Small businesses in New Jersey that received PPP loans to stay alive during the pandemic should not face a mountain of paperwork and a complex, time-consuming, costly, bureaucratic process just to find out whether or not they have to pay it back.” And he continued, “We need small businesses to succeed. We need to allow them to focus their limited resources on keeping their business open, hiring and serving their communities. That‘s why I’ve introduced bipartisan legislation to forgive all PPP loans of $150,000 or less. This legislation covers some of our smallest, most vulnerable neighborhood businesses and they deserve the financial help we promised.”

Sign this petition to both Houses of Congress: “Request immediate forgiveness for small businesses who received PPP Loans of $150,000 or less, and are suffering the most in this pandemic and economic crisis.”

regain our power

Photo credit: Rachael Henning-unsplash

“No dejemos que nos pasen por encima.” We need to regain our power!

When was the last time you felt you had any power in making a decision about your future, your job, your income, your health, your immigration status, or any other important matter to you, your family and your community?

Personally, I feel that every part of my life that is important to me depends more and more on my own actions, loading on my own shoulders if I succeed or fail, and having the constant doubt if I can do enough for my family and my community.

This is what the American Dream has become for Latinos and many others in this country, an enormous propaganda machine that constantly tells YOU that you are a failure if you don’t provide for your family, that YOU have to be self-made and self-sufficient or you are a loser, and that you are a criminal or a rapist if you came to this country to find better opportunities.

But where are those opportunities if you don’t have the power to make your own decisions, being constantly harassed and discriminated?

“No podemos lavarnos las manos,” we need to regain our power.

What can YOU do to regain your power?
  1. Sign these petitions to both Houses of Congress: Latinos and other minority families are many of the essential workers that have been hit the most with the pandemic. Increase protection to these essential workers that are dying at a higher rate than any other population.
  2. Get counted on the Census! Every person in this country needs to be counted, documented or undocumented. Your immigration status IS NOT INCLUDED in the information requested.
  3. Apply for citizenship immediately! If you have a “green card,” you are not safe until you are a citizen in this country. Thousands of immigrants were deported for minor traffic violations and misconducts.
  4. If you are a citizen, REGISTER TO VOTE NOW!

HERMANA, GET POLITICAL!

What would you call a person who doesn’t care about their family, their well-being, or their community?  If YOU care about your future, and YOU still believe this country can provide you and your family with security and opportunities, then YOU must act now!

As mothers, daughters, sisters, most of us carry the burden of our families, looking after our children, caregiving for our families and relatives, and making sure everyone has a roof over their head and food on their table. Now, we call you to step up to take care for our Latinx community and regain our Latino power.

Let our Senators know that Latinos are waiting for answers to their concerns: financial help, jobs, protection for our children, healthcare, an immigration process that makes sense, and the right to live in freedom and in safety.

Our lives are not a political game that can be played to gain votes for the election. Our lives are real, and our needs are many. So, let’s regain our power! “A ponerse los pantalones” and stand up for what we want and what we need!

Hermanas: Yes, we can!   Sí se puede!

You might be interested: Why Latino economic power is greater than political representation

 

 

 

 

 

financial strategies

Best use of PPP and other financing strategies for Latina business owners

Latina business owners are usually in industries that traditional funding sources are reluctant to invest in such as restaurants, beauty and the like. But sooner or later, they will need financing.  Economic times may seem challenging, but they are filled with opportunities.  In fact, this is the best time to invest in your business.  Many businesses have suffered financially.  However, the good news is that there is still capital available.  Take advantage of all the capital resources available right nowand develop your financing strategies.

What is a good financing strategy?
Financing should be part of your overall business.  You spend time on marketing, sales, operations, hiring and administration.  How much time do you spend on developing financing strategies?  A strategy consists of looking at short-term and long-term goals for your business.  All successful businesses had a plan to access capital.  For instance, Facebook raised debt and equity capital until it went public.  They had a financing strategy in place.  What are your options?

Government financing
First, take advantage of the Payment Protection Program (PPP) and Economic Injury Disaster Loans, or EDIL program loans.  Make sure you apply to both PPP and EDIL program.  Many business owners got discouraged when they heard that PPP had run out of funds.  Also, in May the SBA stopped taking EIDL applications.

Now, this has changed.  There is still PPP funding and the SBA is taking new applications for eligible businesses.  These grants and loans are probably the best for your business. Even if you had to pay back these loans, the interest rates on these loans range from 1% to 3.75%.  Also, do not get discourage if you are denied.

You can reapply as many times as you want as long as you can provide new financial documentation to support your case.  With the EIDL you have until December of 2020 to apply and reapply unless if they shut down again. You may need an agent or a business financial advisor to help you out.  Also, there are many initiatives for Latina Business Owners via the SBA and other resources.

Short-term financing options
Second, look into short-term financing options.  Prior to Covid-19 there were many online lenders who were providing business lines of credit and term loans up to 24-months.  Today, that is not the case.  Sad but true, the best online lenders such as On Deck Capital, Kabbage, and others have put lending to a halt.  Many banks are not lending to due the uncertainty in the economy, pending fed rates and also busy processing PPP loans.  As a result, short-term financing may be your only option.  These are loans are based on daily, weekly, and bi-weekly payments.  The repayment terms may range from 3 months to 12 months maximum.  How to integrate this type of capital into your financing strategy?

  1. Short-term returns
    If you are purchasing inventory and you can turn it around in 30 days, you can use short-term funding. If you gain a short-project, this capital may come in handy.2. Short-term planning
    There is saying “There is no tomorrow and there was not yesterday; if you truly want to accomplish your goals you must engulf yourself in today.” Cash flow is the blood line of any business. Integrate short-term financing into a short-term sales strategy. For instance, if you plan to increase online sales that can generate short-term cash that will help you repay back a short-term loan.3. Do not overleverage
    You may get approved for $50,000 but only use what you need.  Instead use $25,000.  This will avoid many problems in the future. Even if you do not need it use a minimal amount to establish a credit relationship4. Establish a credit relationship
    Any lender who is lending right now is assuming a huge risk. The effects of the pandemic on the economy and its recovery remain uncertain. However, if you establish an existing relationship with a short-term lender the future can only get better.  Usually, you can renew these loans when you pay off 50% of the balance or mid-way through the repayment term.  Let us assume you took out an 8-month loan. In month number 4 you can renew the loan.  This means you may be eligible to obtain more money, refinance it and obtain a better repayment term and interest rate.

Equipment financing
Equipment financing is also available in these turbulent times.  Since these loans have the equipment as collateral, they offer great terms.  Repayment terms can range from 2 to 5 years.  Furthermore, they offer monthly payments which help you manage cash flow better.

Sample of financing strategies

Quality Online Cargo Distributors was approved for $30,000 under the Payment Protection Program (PPP). They used the money to cover payroll for the next two months and rehire back existing employees.  Instead, of having the business pay for some of their personal expenses and taking the tax ride offs, they will have those expenses covered by the owner’s salary.  This way they avoid having to repay back PPP funds. In order for the PPP loan to be forgiven, at least 75% of the funds must be used for payroll costs, and 25% or less may be used for other authorized purposes. Payroll costs include: Salary, wages, commissions, or tips.  This business knows that this money will only last for two months.

You might be interested:

This business has other financial needs to address in the future.  As a result, they will need more capital.  With this in mind, they applied for the Economic Injury Disaster Loan (EIDL).  They were approved for $100,000 at a 3.750% interest rate with a 30 year repayment period.  Since this loan has a long-term payment repayment period, rather than using the money all at once they have developed a long-term plan.  Within that plan they considered their slow season and also new business development strategies to capture new clients due to the loss of clients resulting from the pandemic.  They know that this may take 1 year to achieve.  At the same time, they will set aside some of this money for business reserves for emergencies.

Lastly, this business applied for short-term funding and got approved for $100,000.  Instead of taking the $100,000 because the interest rate is higher; they only took $50,000.  They will use this money over a 3-month period, and they have projected to make a short-term return on the use of funds.  Also, they understand that this source of capital can serve their short-term needs on an ongoing basis.  On the other hand, the government incentives program will not be around in the years to come unless in there is another disaster.  Having a source of capital ready, when needed is important for your business.

financial strategies

Lendinero, a bilingual company that works with all types of small businesses. (Logo Courtesy Lendinero)

This business has created a strategy on how to use numerous capital resources.  More important, rather than using the money all at once they have diversified the usage according to the business short-term and long-term needs.  The biggest mistakes businesses make when obtaining funding is not having a clear plan of action and using the funds all at once.  Then, several months later you find yourself in the same position.  The most important aspect of using debt for your business is knowing how to use it and how to achieve return on investment.

This is a brief example.  This plan for this business also entailed a budget, projected profit to loss and other financial projections taking into account loan payments, accounts payables, accounts receivables, reserves, risk management and hypothetical outcomes. This requires time, but it’s worth the investment.  A business with no direction is bound for failure.

(This is a paid contribution from Lendinero, the number 1 company dedicated to find financial solutions for small businesses) 

PPP sole proprietor, forgiveness

How to request forgiveness for PPP sole proprietor

I got my PPP sole proprietor funding last week. How did I do it? I’m not a CPA or a lawyer, and I don’t give accounting or legal advice. This is just my experience, researching, asking my business advisors and the organizations that really represent and work with Latinas in Business Inc.

For sole proprietors and micro-businesses -also known as solo-preneurs-, the SBA subsidies and loans have been a frustrating experience.  Although we were allowed to apply for both the EIDL and the PPP (Paycheck Protection Program) loans, these programs have been designed with large employers in mind.

PPP sole proprietor, forgiveness

(Photo Credit: Sharon McCutcheon – Unsplash)

I reached out to some of our Latinas in Business members and many have given up on applying because they didn’t understand the guidelines, they were wrongly informed by other organizations -and they stayed with that opinion, which is never advisable- or they just didn’t want to “get another loan.”

For whatever reason you did not do it and now you have regrets, you are still on time to apply for the PPP sole proprietor funding  until June 30 -check with your local banks, some are still taking applications!

If there are enough people applying for this or other programs still available, Congress might consider a third round of subsidies for small business, yes, like us.

Keep in mind how to apply for PPP sole proprietor funding (in case of a 3rd round)
  1. If you have an established relationship with your banker -which you always should because they are the ones who take care of your business and the money you earn with so much hard work-, call your banker and ask them if they are still taking applications. If they are not, here’s a list of SBA approved lenders you can go to.

View a list of lenders participating in the Paycheck Protection Program by state as of May 5, 2020.

A shout out to Branch Manager at Investors Bank Jacqueline Sansone, who patiently guided me through the process!

PPP sole proprietor

Isahias Stanback, StedFast, and Jackeline Sansone, Branch Manager, Investors Bank at 2019 Latina SmallBiz Expo.

  1. Make sure you comply with one of these conditions:
    1. You are an independent contractor -you work for some company or companies as a consultant, freelancer or service provider and receive a 1099 at the end of the year.
    2. You are a small-business owner or sole proprietor -you work on your own, and do not receive a 1099 from anyone but your own annual sales (products or services) but you pay self-employment taxes. 
    3. You might be a combination of both -1099 and sales.
    4. You can work under an LLC (Limited Liability Company) as a legal structure and still be considered under these categories.

A shout out to my LegalShield lawyers for their advice on how to determine my eligibility. LegalShield is one of our affiliate marketing programs* and you can apply here to learn more, and start making some residual income right now! 

PPP sole proprietor, forgiveness

Our Affiliate Marketing Program LegalShield is a reputable organization that offers accesible legal protection for small businesses. (L from R) Tenille Ortiz, The Cupcake Factory, LegalShield Rep and Susana G Baumann, Latinas in Business Inc. at the 2019 Latina SmallBiz Expo.

  1. You DO file your taxes as a sole proprietor business and fill out a Form 1040 Schedule C. This is an important step to prove you really are self-employed, no matter in what category you apply on your tax return (sole proprietor, contractor/1099, or LLC if your single-member LLC is taxed as a sole proprietorship). If you are a corporation or S-corporation, and pay yourself a salary, you file a different set of forms.

No matter what SBA said about taking your 2018 tax return as a guidance, you REALLY need your 2019 tax return for your calculation, so file immediately! If you need help filing your taxes we recommend Turbo Tax.

A shout out to TurboTax for making the Self-Employed Tax Filing FREE and Intuit.com QuickBooks for Self-employed for only $1 a month!

  1. What you can include in your calculation:
    1. You take your income on 2019 Schedule C Income Line 31 – Net profit or (loss). Obviously you need net profit to prove you made money out of your business.
    2. Take that number and divide it by 12 -that would be your monthly net profit.
    3. Now multiply this new amount by 2.5.

Example: If your annual net profit was $30,000, your monthly net profit would be $2500, your PPP loan would be $6250. Easy peasy!

  1. Once you fill out your application with your bank, they will require certain documents -such as your 2019 Tax Return Schedule C and a couple of bank statements from your business account- that you would have to attach to prove the amount you are requesting. Remember this could be tax-free income and can be entirely forgiven if you spend the money according to the guidelines under the CARES Act.

You can download a copy of the PPP borrower application form to see the information that will be requested from you when you apply with a lender.

SBA information

Screenshot from SBA.gov website that shows first round of PPP disbursement.

What you can pay with your PPP sole proprietor funding to be forgiven

According to SBA guidelines, “The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).”

So, let’s go one by one:

  1. Payroll: So at least 75% of your PPP must be used for payroll. If you don’t pay yourself a salary and you make payments straight out of your business account for your business expenses, make sure to:
    1. Keep track of personal expenses -if any- versus business expenses;
    2. Keep track of expenses that are not PPP forgivable -supplies, office expenses, car expenses, contractors and vendors, account payables, inventory supplies, etc.
    3. Another way would be to pay yourself at least 75% of that amount by check or transfer to a personal account but this is not an SBA guideline! These are just ways I found out from chat rooms and financial experts’ advice.

ALERT! There are no specific guidelines yet on self-employed or sole proprietors that do not take a salary on how the “forgiveness” must be proven, so keep that in mind and keep your records neat!

DO NOT TAKE THESE IDEAS AS LEGAL OR ACCOUNTING ADVICE, ALWAYS TALK TO YOUR BUSINESS ADVISORS BECAUSE EACH SITUATION IS DIFFERENT!

The rest of the PPP or 25% can be used as follows:

  1. Interest on mortgages: These are interest on mortgage obligations and loans for your business -for instance, you own your chiropractic practice building and you are paying a mortgage on it so your business property is collateral. You cannot include the interest of your house mortgage loan, at least so far, for your home-based business. These expenses qualify as long as these loans were incurred before February 15, 2020.
  2. Rent: Again there are no specific rules for self-employed solo-preneurs but let’s suppose you rent a store building, a workspace or you work in a commercial kitchen, you could pay those expenses with PPP funds from the moment you receive the money in your account over an 8 weeks period. Please document everything carefully! There are no guidelines yet on how to calculate home-based businesses in case you rent and work from home. More to come!
  3. Utilities: The same way, you can pay utilities for an 8-week period since you collect the funding. What is included in “utilities” we partially know, as the SBA guidelines describe phone, internet, gas, water, electricity, etc. What would be included in “etc.” is still a mystery but we believe cell phone bills might also be included. Keep your records straight!
Am I getting “forgiveness” fo my PPP Loan?
forgiveness

(Photo Credits: Felix Koutchinski – Unsplash)

Remember this is A LOAN. Your bank might consider forgiveness if you comply with the SBA Guidelines -and then SBA will repay the loan to your bank. However, they are the ones looking into the nitty gritty details to prove to the SBA that you had followed all the rules and your bank is ultimately responsible for how they see forgiveness or how they want you to prove forgiveness.

Your will have to request forgiveness at the end of the 8-week period for your banking institution to consider it. To maximize your forgiveness, it is mostly necessary that you keep excellent track of all expense information and have it available at the end of your 8-week period.

In case you do not receive forgiveness, loan payments will be deferred for six months, which means you don’t have to pay it back for the next 6 months, and then you will be making payments at 1% per year rate for 18 months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

More guidance on both qualified expenses and forgiveness should be announced by SBA soon. In the meantime, this outline allows you to begin to spend on qualified expenses and properly track all your expenses.

PPP and Unemployment Insurance (UI) benefits

ALERT! According to The Federal Register, which is The Daily Journal of the United States Government, you cannot “double dip” receiving PPP and Unemployment Insurance benefits or Pandemic Unemployment Assistance (PUA), which comes from your state government.

In addition, you should be aware that participation in the PPP may affect your eligibility for state-administered unemployment compensation or unemployment assistance programs, including the programs authorized by Title II, Subtitle A of the CARES Act, or CARES Act Employee Retention Credits.

If you are not sure which program is better for you, think carefully which one will be more helpful for your business and your situation. If you are still doing business -food delivery, catering, essential services, etc.- it is advisable that you use a break with the PPP and get that help.

But if you think your business will be closed for a long time, UI or PUA might be the way to go for you. Again, seek advice from an CPA, tax advisor, or a lawyer to make your own decisions.

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Additional financial assistance resources

According to Business.NJ.gov, here’s a list of other federal financial assistance resources for self-employed and home-based businesses:

 

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