As we write this, current law says the Payroll Protection Program (PPP) cash infusion is going to expire on August 8, 2020.
If you have not yet applied for your PPP cash infusion, you likely need to get your completed application to an approved SBA lender on or before August 6, 2020. Why? Because the SBA needs to approve your loan on or before August 8, 2020.
Approval takes time. For example, when June 30, 2020, was the deadline, lenders stopped taking applications on or before June 28 so they would have time to submit applications and obtain approval on or before June 30.
Many small business owners have not applied for the PPP cash infusion because there’s a four-letter word associated with it.
That word? Loan!
Yep. That four-letter word (loan) has caused many business owners to say I don’t want to play the PPP game.
That’s wrongheaded. The PPP deal is not really a loan. It’s a cash infusion to help you through COVID-19.
Works Like This
For the self-employed and owner-employees of S and C corporations who have SBA-defined earnings of $100,000 or more, here’s the deal:
What if your defined earnings are less than $100,000? Then you will receive less. For example, let’s say you are a Form 1040 Schedule C taxpayer with net profits of
The results above come from the COVID-19 PPP. When you are a self-employed taxpayer with no employees, the PPP treats you as the one and only employee and treats your 2019 net profits as your payroll.
Jack operates as a Form 1040 Schedule C business. His 2019 net profit was $100,000. He qualifies for and receives a $20,833 PPP loan on June 29, 2020.
Sometime during the next 24 weeks, Jack spends the $20,833 on himself and applies for $20,833 (100 percent) of loan forgiveness based on his 2019 Schedule C (yep, last year), which he will receive. It’s automatic. Jack keeps the $20,833.
No tricks, no catches. Just free money in Jack’s pocket.
If you want to be like Jack, you have to apply for your PPP loan today. Don’t wait.
Why? The last day for SBA PPP loan approval is August 8, 2020. Note the word “approval.” Not submission. It takes a few days for approval. Apply immediately.
Bank not helpful? Contact us we will engage with from start to finish.
Planning note. Time is short. Apply to more than one lender, and use the first-come, first-served strategy.
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.