Stimulus checks and extra unemployment are great, but there is also another major program in the stimulus, the Paycheck Protection Program (PPP)! While it's referred to everywhere as a loan, in most cases it's completely forgivable, meaning it really functions more like a grant, totally free money. For my clients, here is why you may or may not want or be able to get one:
1. You need to have a Schedule C on your 2019 taxes. This means you had 1099-Misc from a contracting job, or some other self-employment work (like nannying, personal training, teaching lessons) that you reported on your taxes. This is not for people who just had W2s, you must have had business income.
2. You can't get BOTH unemployment and a PPP loan at the same time. The PPP loan is meant to cover 10 weeks of income, so if you get the loan, you have to stop claiming unemployment for 10 weeks. Now there is some wiggle room about when you stop for 10 weeks, but you do have to stop. So it's important to weigh the benefits of unemployment vs PPP carefully.
3. You have to be able to prove you were "in business" as of Feb 15, 2020. So if you just get random 1099s every now and again, that might not be enough. If you don't have contracting or self-employment income that got paid somewhere in the range of late-Jan to early Feb 2020, your application will likely be denied.
Other than that, there aren't a lot of additional requirements! You can get the PPP loan and still be getting other income, there is no requirement that your business has stopped. In fact, it's meant to help keep your business open, so you can get it if you business has slowed to nothing or if your business is humming along. If you have completely closed your business, that might be a different story, but if you are intending to keep your business going, even if it's on pause, then this loan was designed for you!
How much can you get? Take the profit amount on your Schedule C (line 31), and divide by 12, then multiply by 2.5 (or you can just multiply line 31 by .208333) And it's totally forgivable without you doing anything special, just filling out a short form. To compare to unemployment, divide that amount by 10. If you are getting more than that number on unemployment, you probably don't want to do this.
How can you get one? It's not a good idea to go through a big bank, your application will be low on their priority list. I would recommend using a fintech service like KServicing, BlueVine, or even PayPal. There are many, just google. They are the best places to go for small loans when you don't have an existing banking relationship. There are no fees to apply, the Feds are paying the fees to the banks.
What about a SECOND PPP Loan? Yeah, so in the new stimulus bill, if you already got a PPP loan last year, you can get another one for the same amount (or potentially more) if you meet some requirements.
1. You already got a PPP loan.
2. You can show that you had a 25% decrease in revenue either for the whole year of 2020 compared to 2019, or for any quarter in 2020 compared to the same quarter in 2019. If you don't have Quickbooks or some other software to keep track of your money, you might want to invest in that to create the necessary reports to prove revenue loss. Or we can do a draft Schedule C for 2020 if you are doing the year-over-year loss. This is about revenue, not profit, so deductions are not involved in this.
So if you are one of my clients who already got a PPP loan, you might be able to get another one!
If you want my help with this, please set up a personal financial planning appt on the scheduling page, I will be happy to help with your application for the loan and for forgiveness.
1. You need to have a Schedule C on your 2019 taxes. This means you had 1099-Misc from a contracting job, or some other self-employment work (like nannying, personal training, teaching lessons) that you reported on your taxes. This is not for people who just had W2s, you must have had business income.
2. You can't get BOTH unemployment and a PPP loan at the same time. The PPP loan is meant to cover 10 weeks of income, so if you get the loan, you have to stop claiming unemployment for 10 weeks. Now there is some wiggle room about when you stop for 10 weeks, but you do have to stop. So it's important to weigh the benefits of unemployment vs PPP carefully.
3. You have to be able to prove you were "in business" as of Feb 15, 2020. So if you just get random 1099s every now and again, that might not be enough. If you don't have contracting or self-employment income that got paid somewhere in the range of late-Jan to early Feb 2020, your application will likely be denied.
Other than that, there aren't a lot of additional requirements! You can get the PPP loan and still be getting other income, there is no requirement that your business has stopped. In fact, it's meant to help keep your business open, so you can get it if you business has slowed to nothing or if your business is humming along. If you have completely closed your business, that might be a different story, but if you are intending to keep your business going, even if it's on pause, then this loan was designed for you!
How much can you get? Take the profit amount on your Schedule C (line 31), and divide by 12, then multiply by 2.5 (or you can just multiply line 31 by .208333) And it's totally forgivable without you doing anything special, just filling out a short form. To compare to unemployment, divide that amount by 10. If you are getting more than that number on unemployment, you probably don't want to do this.
How can you get one? It's not a good idea to go through a big bank, your application will be low on their priority list. I would recommend using a fintech service like KServicing, BlueVine, or even PayPal. There are many, just google. They are the best places to go for small loans when you don't have an existing banking relationship. There are no fees to apply, the Feds are paying the fees to the banks.
What about a SECOND PPP Loan? Yeah, so in the new stimulus bill, if you already got a PPP loan last year, you can get another one for the same amount (or potentially more) if you meet some requirements.
1. You already got a PPP loan.
2. You can show that you had a 25% decrease in revenue either for the whole year of 2020 compared to 2019, or for any quarter in 2020 compared to the same quarter in 2019. If you don't have Quickbooks or some other software to keep track of your money, you might want to invest in that to create the necessary reports to prove revenue loss. Or we can do a draft Schedule C for 2020 if you are doing the year-over-year loss. This is about revenue, not profit, so deductions are not involved in this.
So if you are one of my clients who already got a PPP loan, you might be able to get another one!
If you want my help with this, please set up a personal financial planning appt on the scheduling page, I will be happy to help with your application for the loan and for forgiveness.
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