{"id":3667,"date":"2020-05-28T17:58:23","date_gmt":"2020-05-29T00:58:23","guid":{"rendered":"http:\/\/www.successseriesllc.com\/wordpress\/?p=3667"},"modified":"2020-05-28T17:58:23","modified_gmt":"2020-05-29T00:58:23","slug":"another-view-of-ppp","status":"publish","type":"post","link":"http:\/\/www.successseriesllc.com\/wordpress\/2020\/another-view-of-ppp\/","title":{"rendered":"Another View of PPP"},"content":{"rendered":"

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#GrowYourLife\u00a0 #BuildYourBusiness<\/strong><\/h2>\n

Life Area: Professional <\/strong>
\nTopic: Paycheck Protection Program<\/strong><\/p>\n

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Another View of PPP<\/h2>\n

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This blog post is for my clients and audience member businesses, sole proprietors, and independent contractors that received or will receive Paycheck Protection Program (PPP) funds.<\/p>\n

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If you were lucky enough to be allocated some of the PPP money, congratulations, many applied but few were selected. The money from the first tranche of the program dried up in just 13 days, the second tranche was gone in less than 24 hours!<\/p>\n

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So, I know what you are thinking based on my interaction with clients: \u201cI must spend all this money so I can get it all forgiven.\u201d My advice is to: Get that thought out of your head!<\/strong><\/p>\n

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The new Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the Emergency Injury Disaster Loan (EIDL) and the Families First Coronavirus Response Act (FFCRA Act) initiated various loan programs, tax credit programs, and deferral programs that all intermingle with one another. If you opt for one program, it may preclude you from using another one of the programs.<\/p>\n

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Your goal should not be to spend all the proceeds<\/u><\/strong> so that everything is forgiven. If that happens, great, but that should not be your goal. <\/em><\/p>\n

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PPP is a two-step process<\/strong><\/h3>\n

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The Paycheck Protection Program is a two-step process:<\/p>\n

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  1. Get the Money<\/u> \u2013 you did that!<\/li>\n
  2. Spend the Money<\/u> \u2013 this is what this blog post is about, and the calculations are a little tricky when it comes to what is forgivable or not!<\/li>\n<\/ol>\n

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    Your goal should not be to spend all the proceeds<\/u><\/strong> so that everything is forgiven. If that happens, great, but that should not be your goal. You received this money to pay for expenses in the normal course of business over a designated eight-week period. You should spend the money as you would in the normal course of business based on your cash forecasting. The driver for spending the funds should be made on an economic basis, not based on making an expense forgivable.<\/strong><\/p>\n

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    The forgivable expenses are pretty straight forward. If you have to ask yourself \u201cDoes this expense qualify to be forgiven?\u201d \u2013 it probably doesn\u2019t. I have listed the qualifying expenses below. Simply put, qualifying expenses are payroll and related (at least 75% of the PPP funds) and certain business expenses including mortgage\/lease payments and utilities (can not exceed 25%).<\/p>\n

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    You don\u2019t want to put yourself in a situation where you spend all the loan proceeds thinking all expenses are forgivable, only to find out that some were not. Under that scenario you have a short-term loan (24 months) and no immediate funds to pay it. Remember, at some point you will be sitting in front of a bank officer to review and justify the expenses you paid with the PPP money. The bank is deciding for the government what expenses qualify to be forgiven, and this decision is not taken lightly.<\/p>\n

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    Eligible Expenses<\/strong><\/h3>\n

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    Forgivable expenses are broken down into two categories, payroll costs and other costs. You must spend at least 75% on payroll costs and no more than 25% on the other costs. You can spend more than 75% on payroll costs, but the calculation to determine the forgivable payroll may make some payroll costs not forgivable. Stated another way, just because you spend the money on payroll costs, that doesn\u2019t automatically make it a forgivable expense because of the head count calculation.<\/p>\n

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    Payroll Costs include:<\/u><\/strong><\/p>\n