Paycheck Protection for Freelancers

[00:00:04] Hello, welcome, everyone. Hello, how are we doing tonight? All right, so if you want to say hello in the chat. Awesome to see everyone coming on in, say hello. Where are you from? That would be awesome. [00:00:20][16.3]

[00:00:21] And I will get us going here with. The presentation, so I’m going to put a poll in the chat, let me see if I can launch this. Here we go. All right. Awesome. Cool. So you guys should be able to see the poll. [00:00:41][20.2]

[00:00:43] Cool, I’m getting responses already, which means you guys can see that if you guys could fill that out, that will be really helpful for me because I want to make sure that we are focusing on the most relevant information for you guys. And depending on what your business situation is, it’s all going to be a little bit different. OK, so let me share my screen while we’re doing the pole here. [00:01:05][21.3]

[00:01:07] Awesome. Perfect. OK, so we are going to dig right in here pretty quick. [00:01:10][3.4]

[00:01:12] Again, if you’re just coming in, if you could say hello in the chat and also fill out the poll and let me know kind of what your business situation is so that I can. [00:01:23][10.9]

[00:01:26] Help you out here, so, OK, perfect. [00:01:28][1.8]

[00:01:29] All right, so I do want to acknowledge Alan Gassmann and Brandon Ketron, they’re from a law firm in Florida and I have spent probably 10 hours, 12 hours with them. They gave a lot of really good information. [00:01:44][14.2]

[00:01:44] So I just wanted to do a shout out to them for where a lot of this information came from. I took a lot of their information. They have kind of bigger businesses that they work with and then took the information for freelancers to make this happen. So let me check in on the chat here. It’s part of the chat and the poll and everything at once. [00:02:07][22.5]

[00:02:07] You’re awesome. People from all over. All right, cool. California, North Carolina, Massachusetts, New York. Awesome. If you change in the chat, you change it to panelists and attendees and everyone can see the chat. If it goes to just panelist’s, I’m the only one that can see it. So I’m seeing a lot of these just panelists. So you guys probably aren’t seeing Baltimore to Baltimore, Maryland. Iowa, L.A., New Jersey, awesome. Perfect. Hello, everyone, cool, very cool. Awesome. All right, so let’s I’m going to close the chat for now and I’m going to dig in. So a couple of disclaimers right up front. There are a ton of regulations that got released in the last couple of weeks. So like six thousand pages worth. So the the acts that we’re going to talk about that was passed in December was five thousand pages just by itself. And then there’s the SBA guidelines and the interim final rules and all this stuff that came out. So we are not covering everything. There’s no possible way for me to cover everything. I’m going to go through the scenarios that I think are probably most likely for your situation based on what I know about my community. But I’m going to say it over and over again. If you’re not sure, talk to a CPA or an attorney that has this information and understands your situation, because I’m going to talk generically about some common situations. But just like taxes, everybody’s going to be a little bit different. So that’s the first thing. Second thing, I’m not a lawyer. I’m not a CPA. I don’t represent the SBA or any other government entity, and I don’t represent a bank or a lender. So I’m going to, again, give you some kind of general advice. But for your specific situation, your lender might have different advice. The SBA might have different advice, lawyers, accountants, all that stuff. So always encourage you to make sure for your specific situation that you’re talking to the professionals. So. Here’s the legal disclaimer that kind of says all that, so basically I’m not a substitute for hiring a lawyer. I’m not giving you tax advice and there’s no guarantee of any type of income. We’re going to walk through scenarios on what you could get, possibly from from the paycheck protection program. But this is not a guarantee that you will qualify. I’m going to talk about some eligibility requirements, but again, I can’t cover all of them. So, again, talk to a lawyer or an accountant about your specific situation. So if you want more on that and about the organization as a whole, you can look at our earnings disclaimer, freelancecoop.org/earnings-disclaimer that will give you all the information on what we promise and what we don’t promise. But basically, the short of it is there is no guarantee of income or that you’re going to qualify for the PPP on this webinar. So. [00:05:07][180.0]

[00:05:08] Perfect. [00:05:08][0.0]

[00:05:09] OK, so who is here tonight, I am seeing lots of names and where you’re from, if you could please answer the poll. So it looks like most of you, 90 percent of you have answered this. This will help me focus on the most relevant information and making sure that I’m not spending a ton of time. So there’s different regulations for different business scenarios. So I’m going to spend more time on the ones that are most relevant to you guys. So if you could just fill a poll, two questions, it’ll take you two seconds. Just basically finding out if you got a first draw of the paycheck protection program and what kind of business entity that you have. So looking at the poll results so far, it looks like what I kind of predicted that most of you did not receive first draw. But we will talk about those that did. And then a majority of you are sole proprietors or unsure of your entity. So we’re going to talk about that as well. So if you have not answered that poll, if you could do that for me, that would be awesome. [00:06:14][65.5]

[00:06:17] OK, so tonight’s presentation, I want to start right off with a caveat, this in the paycheck protection program is for you if you’re a US based freelancer, so you pay taxes in the United States, you have residence in the United States, your business is in the United States and you’re a freelancer or business owner. So if you are an employee of a company and that’s where your income comes from, most of this probably won’t apply to you. [00:06:43][26.3]

[00:06:43] If you are an employee and you do freelancing on the side, it could. But if you just are employed or if you’re outside the United States, it is likely that none of this will apply to you. So that’s the first kind of eligibility I wanted to give everybody the opportunity to not waste a ton of time going through all these regulations just to find out that you’re not eligible. So. All right. So how it’s going to work? I’m going to go through the agenda in just a minute, but basically we’re going to go through the whole process of finding out if you’re eligible and how much you might be able to get from the paycheck protection program. If you have a question, please put it in the Q&A box. The chat is really hard to keep track of as I’m presenting. So if you have a question, put it in the Q&A box. I’ll try to look at it throughout the presentation, but we will have Q&A at the end. But again, I’m not a lawyer or a CPA, so I’m going to answer based on what I know of your situation. But I will be able to direct you to resources if I can’t answer your questions. So I do want to just kind of set that, that if you’re looking for legal advice, this is not the webinar for you. So awesome. Let me just check in on the chat. [00:07:53][69.5]

[00:07:56] Yes, we’ll be talking about yes, 1099 sole proprietor, and if you have two income as well, we’ll be talking about that and any other questions before we get started. Awesome. OK, so any other questions from here on out, just stick them in the Q&A box and I will answer as we go. OK, so what we’re talking about the paycheck protection program, so the paycheck protection program was launched back in April during the CARES Act, which is also known as the first stimulus bill on December 27th. The coronavirus response and Relief Supplemental Appropriations Act was passed, which opened up a second draw of the Paycheck Protection Program, and it provided some other stimulus things that will mentioned briefly. But basically this act is referred to as a lot of things. The second stimulus bill, the SBA has been calling it the Economic Aid Act. So lots of different things. But basically we’re talking about the second draw of the paycheck protection program which launched today. We’ll talk about who was able to apply today and who can apply tomorrow and through the rest of the week. It was like the first roll out, a little hinky this morning. So that’s usually how it goes the first day of these things being released. But we’ll talk about that. So this is kind of our agenda for the evening. We’re going to talk about new tax changes. Not again, not all of them, just a couple that I thought were really interesting for freelancers. Tips for when you’re applying for paycheck protection program and other government aid eligibility questions, how much you could possibly get will walk right through the calculations. So if you’re listening and you don’t have your 2019 taxes on hand, if you have your tax return documents, that’ll make things a lot easier, because we can you can kind of get an estimate right on this call today. If you’re an overachiever and filed your 2020 tax returns, you can use those as well. So then I’m going to walk through the application, what it looks like, what to expect in the process, how to get the loan forgiven. For most people, it’s going to be a pretty simple process to get it forgiven, whether you had a first draw or not. And I’m going to talk very briefly about the EIDL. The reason I’m going to talk about that is it’s usually lumped in with the paycheck protection program as part of the stimulus bill. It’s another form of aid for businesses, but it’s a little bit more complicated. And we’ll get into that and then we’ll have Q&A again. I’m happy to answer as many questions as I can and talk about specific situations. But again, not a lawyer, not an accountant, not part of the SBA. [00:10:27][150.7]

[00:10:29] OK, so let’s talk about a couple new tax updates for freelancers that came out of this December 27th Economic Aid Act. So first of all, this one is the one that’s most exciting for me. You may know if you’ve been in business for a while, that write offs for meals and entertainment, which was the category meals and entertainment, was being phased out and it dropped down to 50 percent write off. So if you went out to dinner and business dinner and you spent one hundred dollars, you could only claim 50 dollars on your taxes as a deductible expense. Well, now to jumpstart the restaurant industry for twenty twenty one. So this coming year and next year. So 20, 20 is still in the old rules. But so for this year coming up, you get one hundred percent right off on business meals if you eat them at a restaurant. [00:11:22][52.4]

[00:11:22] So again, same qualifications that I’ve always had with it has to be a business dinner. You have to document all that stuff. But I’m really excited about that. So I want to share that with you because business dinners are a big part of of my business. [00:11:37][14.4]

[00:11:39] Secondly, three hundred dollars, or if you’re married and you file jointly, six hundred dollars above the line, charitable deduction. So in 2021, so above the line, what that means is if on your taxes you use the standard deduction, you don’t. That means you don’t itemize all your things. You still get that three hundred dollars. So a lot of tax deductions are only for itemized people that do itemize. But if you do the standard deduction, you also get that three hundred dollars. So it’s a good thing. So. So donate to charity as much as you can in 2021. [00:12:14][35.0]

[00:12:17] And this was really good news that kind of came out of the regulations in the last week, there was a lot of confusion on what was taxable and what was not. [00:12:24][7.3]

[00:12:25] So the paycheck protection program and the EIDL grants, which we’ll talk about a little bit, are not taxable income. So if you got a paycheck protection program that does not count as income on your taxes. But the great thing is the expenses that you paid with that money. So for most of us, that was payroll are still tax deductible. So it’s kind of like a really cool arrangement for taxes, meaning that income is not taxed, but you can still deduct the expenses that you paid with it. So it’s kind of an extra boost with that. So those are the there is a ton of other tax updates. Those are the ones that I found most relevant for most of our situations. The CARES Act had a whole bunch of other ones back in April that are are going to now affect the tax returns that you’re probably going to be filing in the next couple of months at freelancecoop.org/CARESact. I broke down a lot of those back in April. So that site is still live. You can look at some of those changes again, make sure to talk with your accountant, find an accountant that really understands freelancing when you’re preparing your taxes, because there’s a lot of good deductions that that were released this year. [00:13:41][76.2]

[00:13:42] So that’s tax deductions. I want to talk quickly about a few tips and tricks for applying for PPP and any other government programs here. [00:13:51][9.4]

[00:13:52] OK, so number one, beware of SBA scams. [00:13:58][5.7]

[00:13:58] So the paycheck protection program by design is pretty easy to get comparatively with other SBA programs. It’s kind of a simple process for applying. So whenever there’s a lot of money that’s out there, a lot of services start popping up for people because especially businesses are very desperate right now. So there’s a lot of scams out there. So any services that ask for money for help with the application be very skeptical of them. Obviously, your accountant and your lawyer are going to charge for their time, but anybody that’s guaranteeing you so much money or they have a fast track to the SBA or anything like that, those just don’t exist. So there’s nobody that has a fast track to get your loan to the top of the list or anything like that. So anybody that says you pay the money, you can get your loan faster, you can get more is usually going to be a scam. The other thing is phishing sites. So anything that the SBA has is going to be a dot gov site. So SBA dot gov. If you’re on a site that looks like it might be the SBA, just look up in your browser bar, make sure that it’s a dot gov site, because there’s a lot of sites out there now that are collecting sensitive information because everybody’s applying for these loans. So try and only go to those dot gov sites or working directly with your bank at your bank site. Watch out for emails that look like they’re from the SBA and ask you for information that SBA is never going to ask you to reenter your Social Security number or your EIN or anything like that. And misinformation. I call this the Uncle Frank effect because will have that uncle. Right? That’s like telling you what he heard on the news about what you can apply for or some guy that said he was able to get two million dollars from the PPP even though he didn’t make any money last year, or just watch out for anybody that’s telling you information and can’t direct you to the primary source where that information is found. If you have any questions about any of the information that I’m sharing with you tonight, I’m happy to point you to the source where I got this stuff from. Always kind of look, I was having this conversation. My son is 12 within the other day about primary sources. He’s on Tiktok he’s getting news from Tiktok which is fine, but always kind of saying, hey, when you hear something on tick tock, make sure that you going to the primary and reputable sources. And it’s the same for this. So just because somebody said that you can do something usually is not going to be true. So just watch out for any of that stuff. The other thing that I tell everybody that I work with when I work with freelancers, they’ll ask me things like, do you think I should apply for this job? I don’t know if I’m qualified. I always say apply and let them say no. And so this is one of those scenarios. If you’re not sure if you go through the presentation tonight and you’re not sure, go ahead and go through your bank and apply for it, because you can always opt out. You can find out if you’re if you’re qualified, if you’re approved for the loan and then say, you know what, never mind, I’m not going to do it. You can always pay it back if you get it and decide that you don’t need it. We saw this a lot happening over the summer when people were getting PPP and then the kind of the public where they were under a lot of scrutiny and the public said, like, that’s not fair. I can’t believe that they that they got that a lot of these organizations ended up giving back the money. So that’s always an option. And you can always adjust later. It’s like with taxes, people get so worked up about like, what if I do it wrong? Well, if you do it wrong, what happens is the IRS sends you a letter and asks you to adjust it or you kind of recalculate and look at it. You can always go back and adjust your application. Every government organization kind of has a time period and it’s different for each program and when you can amend that application. So always apply if you’re eligible, always be honest. Your applications always disclose anything that they’re asking you to disclose and let them be the ones to say no, because it’s much better to apply and then decide you don’t need it, then not apply. And the funding runs out and you missed out because you were wavering. So apply kind of fast and as soon as you can. So the deadline for March for this round is March thirty first. So we do have a little bit of time. But I will say the first funding round, if you remember, ran out of funds very quickly. And this is the second drawer again, that’s opened up to everyone. And so it is very likely that they’ll run out of funding. This is the lowest funded round as far as the money that went into this round of it. So as soon as you can, you want to apply. And it’s not in the slides, but today it opened up to first draw borrowers. So if you didn’t get one last round and small community banks, so they open it up first for small community banks. So if you have like Bank of America, Wells Fargo, they have an open those up. Yet on Wednesday, it will open up to second draw borrowers. So a lot of people based on the poll, a lot of you are going to be eligible to apply as soon as tomorrow. So contact your bank as soon as you can based on the information that we’re going to cover. So I’m just going to look at the poll here one more one more time. OK, great. I’m going to end that because it’s poppin things up, so what I’m seeing is 15 percent of the of people on right now applied for PPP in the first round. 77% did not and then 8% are not sure. So we’ll go through. If you applied, you’ll recognize some of this stuff. So hopefully we get that figured out if you applied the first round or not, it went through your bank and not through the SBA. So that might help. And then what structure that you have. So most people, 60 percent are sole proprietors, a few LLC, which are a little bit complicated as LLC is a lot of times are in Taxes. We’ll get into that and then corporations at 9%. So again, other not sure. Hopefully we’ll get that cleared up for you further on in the presentation. So I will share the results. [00:20:12][373.7]

[00:20:14] With that and let me see if I can. [00:20:16][1.2]

[00:20:18] OK, so now everybody should be able to see that I’m going to stop sharing now, though, because I can’t close it out here. OK, I’ll see. OK, perfect. So. Let’s keep on going here. [00:20:33][15.3]

[00:20:34] So are we eligible? This is the question a lot of you had. I had a lot of eligibility questions in my email. I will start out by saying you do not have to have an LLC or corporation to be eligible or go through exactly how to find out if you’re eligible based on how you filed your taxes in 2019. And we will dig in from there. So a couple eligibility exclusions. There are many more. So there’s ones on if your organization does illegal activity, if you do business in China, if you were convicted of fraud or a felony, there’s a lot of different exclusions. So these are the ones that I’m assuming are going to be most relevant to most of you. So you are excluded if you are a new business, which the SBA is defining as you were in not in operation on February 15th, 2020. So this is just before the pandemic hit. You needed to be in operation as of February 15th of last year. So about a year old. If you’re newer than that, you are not eligible. You cannot have more than 300 employees. I’m not going to dig into the exceptions here. There are a couple, but if you have a big business with more than three hundred employees, you’re not eligible in most cases, or if you are permanently closed or in bankruptcy. Again, there’s a little bit of an exceptions on the bankruptcy. Talk to your bankruptcy attorney on that. But mostly the intent of the paycheck protection program is to retain American jobs. And so if you are applying for this, you must be planning to continue business, whether you’re a freelancer or you employ people. You need to be planning on keeping doing that during the duration of your loan. So that’s the first one. Let’s talk about necessity every time I see this word, which has been a lot lately, I think of The Jungle Book and Baloo and Mowgli singing that song, which I’m not going to sing for you today. But this is the big kind of controversial part of the paycheck protection program, is you need to certify that the paycheck protection program is necessary for the continued operations of your business. And I’ll show you the exact language that’s used. So this is on the application. You have to certify that current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant. So what does that mean? What does necessary mean? The lawyers that I mentioned, Alan Gassmann and Brendan, they spent literally like 15 slides on how the Supreme Court in the in case law defines necessary. So I’m not going to get into all that. And I’m not a lawyer. That stuff doesn’t make me excited. But basically, you have to say that if you didn’t get this loan, then it is likely that you would have to downsize or cease operations. So you need this loan to be able to continue. If you remember way back in the CARES Act, the intent of paycheck retention program was to give businesses money so that they didn’t have to lay off their workforce. So you have to certify that you are going to keep operating and that you without the loan, you wouldn’t be able to keep operating at the level they are operating. So this is really important and it’s something probably for the most of us is going to be the thing that we’re going to think about the most on certification, on what necessary means. I will say a couple of things about this and how we prove that it was necessary. So if you had to get a loan less than two million dollars, which is going to be all of us, I’m assuming if you’re getting a loan, if you qualify for a loan more than two million dollars through paycheck protection, you’re probably on the wrong webinar. And you probably need to be talking to your business attorney or your corporate attorney. But anybody that got a loan, less than two million, the SBA is going to assume that you are that it’s necessary for you and that you’re applying in good faith. So what that means is you don’t have to prove to the SBA that this loan is necessary. You have to sign and certify it, but you don’t have to prove documentation. But there is a catch. The catch is so to prevent fraud, because if you remember, there was a lot of fraud over the summer and a lot of people it’s in the news all the time of businesses that got big loans that didn’t need them. So what the SBA has decided is that the loan details will not be kept confidential, which means in the last round it was loans over one hundred and fifty thousand. You can it’s a searchable database where you find out what businesses got. This is going to be for everyone now. So even if you get a loan for five thousand dollars, your company or your name and the amount that you got is going to be a search in a searchable database. So what that does is allows other agencies. So the SBA is not going to investigate you, but the IRS could and the IRS could determine that you didn’t need it and therefore it’s taxable. We haven’t seen this happen yet, but it is opening up this possibility. So it’s something to know or even whistleblowers. So you can go on SBA and search that database and somebody could search your company and then say this person didn’t need it and open up an investigation or a news story or anything like that. So if you don’t need this loan or if you’re doing fine or you’re doing better this year than you were last year, I would think twice about applying for paycheck protection program. So like I said, this is kind of a gray area. There’s going to be a few of these because it’s new and there’s not an established case law about how these things are going to be handled. But I did want to kind of open up the risk and share with you guys what could possibly happen based on how the laws were written. So if you are not sure, talk to an attorney or your CPA. Every CPA and attorney also has different levels of risk. So make sure that you have that conversation with them. So additional eligibility requirements if this is your second draw, so the 15 percent or so of you that this is your second draw, the first thing you have to prove is a twenty five percent drop in gross receipts in a single quarter. So you get to pick which quarter it is for a lot of us that second quarter, because the pandemic hit right at the end of the first quarter, the second quarter was kind of the worst for everybody. So if your second quarter this year and 2020 was twenty five percent less than your second quarter in 2019, you’re good. Or any other quarter. So it could have been first quarter, second quarter, third quarter or fourth quarter. So you just had to prove it for one quarter. If you’re twenty five percent down over the whole year, the SBA will take proof in your tax return. So if your tax returns you’re filing twenty five percent less in gross receipts, then that count for the whole year and gross receipts means revenue. It does not include the paycheck protection program first drawer. So for most of us, we got it in the second quarter. So if your second quarter was down, but if you include the paycheck protection program, it was flat. It still counts. So, again, the paycheck protection program, first drawer and second drawer does not count as revenue for your business. So it doesn’t count as a gross receipt. So there’s a definition the SBA has for what gross receipts means. But for most of us, it’s revenue that clients have paid you. And for most of us, the second eligibility requirements, not a problem. You must have already spent the first loan. So you must have you had twenty four weeks to spend it. So you must have spend it, spend it on your qualifying expenses. If you have it left over and sitting in a bank account somewhere, I recommend spending it on payroll. But if you, if it is sitting in a bank you are not eligible for a second draw. So let me look at questions and see if there’s any that I can answer real quick and then we’ll dig into calculating how much you can get is the same as SBA loan. Maybe so, SBA has many loan programs, so there are lots of different types of loans, I’m not sure what loan that you got Jazelle. So it could be so, yes, that PPP is an SBA loan, but there are also other ones. There’s EIDL, there’s the SBA, small business loans. They all have like weird numbers and stuff. So I would check with the lender that you went through. If you went directly through the SBA, it’s likely that was an EIDL. Paycheck protection program went through your bank. Can you receive PPP if you’re receiving PUA. PUA is pandemic unemployment assistance, no, you cannot. So basically unemployment was designed for people that are that have jobs and PPP was designed for people that provide jobs. Freelancers are kind of somewhere in the middle because we provide our own jobs. So if you got unemployment as a freelancer, you can’t also get PPP. [00:30:05][571.8]

[00:30:06] That’s like double you’re getting double dipping, kind of. So, no, you cannot. [00:30:12][5.6]

[00:30:16] How does this differ from the grant program, or is it the same? So PPP is a forgivable loan, so it’s not a grant per say, but most of us can get the loan forgiven. So it functions kind of as a grant. So this question from Clayton, so it’s kind of a grant, but it is it is being categorized as a forgivable loan. So if you will talk about how to get the loan forgiven. So basically, if you get the loan and you spend it on qualified expenses, it turns into a grant. There’s also the EIDL grant, which we’ll talk about in a little bit, which is a little bit different. OK, Anthony, “I grossed $32K last year, how much can I apply for? We will talk about that. And if you have your tax returns with you, you we can calculate it. You can calculate it right out and you’ll get a pretty good estimate of what that is. So there’s a line on your taxes that will go through. My bank contact that they open today to process community financial institutions that serve. Yes, that’s exactly right, Michael. Today. So I’ll read Michael’s questions, my bank contact said they open today to process the community financial institutes that serve minority and women owned businesses to make loans? Yes. So this week for community banks. So there’s a couple qualifications on what a community bank is. It doesn’t mean only in minority and women owned businesses can apply. It means the banks that most serve those can open up. So they basically there was a big problem in the last round that the first round, the first round of PPP got eaten up by big banks like Bank of America that were serving huge corporations. And so the huge corporations got all the paycheck protection program money before these smaller business and then specifically minority and women owned businesses, the SBA found did not have access to that capital. So this round, they changed it a little bit. So this week is for those small community banks so that so that people it was a more equitable access to capital. How does credit affect my eligibility? It doesn’t for paycheck protection program, there is no credit check EIDL loans it does affect which we’ll talk about, but credit score does not affect paycheck protection program. [00:32:42][146.0]

[00:32:44] Let’s see. [00:32:44][0.2]

[00:32:46] What’s the best site to apply Kabbage, Lendio, for example? So this kind of depends on your situation. Kabbage and Lendio are great. There are a number of banks that are really good, simplified process. I always recommend go through the lender that you do your business banking with, if possible, because they can help you with the paperwork. And for many of us, they are smaller banks that are that are more hands on. They understand, but everybody situation’s a little bit different on that. So I can’t give you a great answer on what lender is best for you. But look around and see, I went through Cross River Banks. Their process was really great for me and my situation. Michael, do you have to prove necessity or just check box under penalty? If your loan is under two million, which I’m assuming it is, you do not have to prove it. You just have to check the box. But like I said, it will be public. So you could be investigated by other organizations. [00:33:49][63.5]

[00:33:50] Again, there’s no precedent that that has happened, but it is a possibility once things settle out that the IRS is going to look closely at these at these grants and loans. [00:33:59][8.5]

[00:34:01] So if this is my first draw, am I eligible for more money, can I apply for a second round after I apply? No. So the first round is closed. So even though this is your first draw, it’s the second round, so the first round is closed. And so, no, you if you did not apply the first round, you only get one one application. Am I eligible for more? No, you get the same it’s the same calculation. Whether it’s your first or second draw. There’s a couple differences which I’ll cover. [00:34:32][31.2]

[00:34:37] Next question to Schedule C loss in 2019. Do I need to have a larger loss for twenty twenty to be eligible if you did not have a second draw, if you didn’t have a first draft? This is your if this is your first application, you do not need to prove that twenty five percent reduction. So but you are ineligible for another reason because these which we’ll talk about the schedule C net profit or loss is the number that they base what you get on. So I have this question come up earlier with a friend of mine. Actually, what I recommend is if you made more money in 2020, file your 2020 taxes as soon as you can so that you can use the schedule C 2020 to to determine how much you’re eligible for. [00:35:29][52.0]

[00:35:29] You’ll see why you’re not going to be eligible when we go through the calculations in just a minute. [00:35:33][3.7]

[00:35:35] What happens if you end up picking up a big client or business picks up after you receive the PPP? That totally depends on your situation if you are a sole proprietor. [00:35:47][11.6]

[00:35:48] Nothing happens if you are really either way. Nothing happens if you get money afterwards. [00:35:54][6.2]

[00:35:55] You just have to spend the PPP on the eligible expenses, which we’ll talk about what eligible expenses are in a little bit. [00:36:01][5.6]

[00:36:03] Can you transition off PUA into PP? Probably not if you’ve been receiving unemployment this whole time, but that is a really specific question that’s probably better for an accountant. If we did not receive the first round, do we still have to meet the requirement of 25 percent decrease as the regulations are and the applications are written now? No, you do not. Only that’s only for second draw people. So but again, things can change on that. But as of right now, that’s only for a second draw. People, what if I got unemployment. Yeah. So unemployment. If you got unemployment then you do not qualify for the paycheck protection program. So. [00:36:47][43.8]

[00:36:52] Yeah, all these questions about unemployment and what you qualify for, talk to an accountant about these because everybody’s situation is going to be a little bit different. So I’m just going to kind of skip through these unemployment questions, because if you’ve got unemployment in most cases, you’re probably not eligible. But talk to your accountant. Yes, I Cherlyn, as far as discuss the forgiveness process, I have a whole section slides. We’ll talk about forgiveness. And if you and yes, it is much easier now. And it’s amazing for freelancers, freelancers that are sole proprietors. This law is like crazy good for good for you. So we’ll talk about forgiveness in a few minutes. If you receive regular unemployment, aren’t receiving it currently, again, talk to your accountant on that one. I’m paid to buy a sole proprietor, his employer ID number, but I have 1099 under my Social Security number, is it a double dip? No, no. [00:37:52][59.4]

[00:37:52] And I’ll I’ll go through that when we do the calculation. There’s a couple people that have that question about if I’m a 1099 and W-2 employer. [00:38:01][8.3]

[00:38:04] OK, all right, so that’s the question for now, I’ll do another round of of going through questions after we finish this next calculation process, so. [00:38:13][9.0]

[00:38:14] Grab your tax returns if you have them handy, and so for the majority of second time borrowers, it’s really easy. I would recommend if this is your second draw, use the same lender that you used before and you should be eligible for the same exact amount. You do not need to provide the documents again. If you remember, you had to provide your schedule C, you had to provide your payroll to provide a bunch of paperwork to the lenders. They’ve kind of fast tracked it. So if it’s your second draw, it’s just basically going to roll over and give you the same exact amount that you got the first time. The only difference is you’ll need to sign all your certifications. I’ll go through what those certifications are when we look at the application. But the first one is the necessity. And the second one that you’ll have to certify is that you had a twenty five percent drop in gross receipts one quarter to the next. So let’s talk about scenario one, so these this is the minority of you, based on the poll you pay yourself and possibly employees, maybe you’re the only employee in my situation. Me, my husband and my stepdaughter are on payroll through my corporation so that I fit in scenario one. So if you pay yourself and employees through payroll and file a separate tax return for your business, so every year you file two tax returns, a corporate return and a personal return. This is scenario one. This is for you and how you calculate it. If this is not, you will cover you in just a second. So this is corporations and LLC that are taxed as corporations. So L.L.C. are, like I said, a little bit complicated because LLCs can be taxed as a corporation or it can be what’s called a pass-through entity where you file it on your tax, on your personal tax return. So if you file LLC as a corporation or you have a corporation, so for scenario one, the reference periods you can use figuring out how much you could get, you can use calendar year 2019, you can use calendar year 2020 or you can use the 12 months immediately preceding your loan date. So if you apply tomorrow, for example, it’s not going to be much different. 12 months versus calendar year 2020. but say you wait till February because you had a really great year, a great month in January and you want to have that number be up a little bit. You can do February to January, February 2020 to January 2021. There are also a few seasonal and special scenarios. If you’re a seasonal employee or seasonal corporation that employs people seasonally or a couple other special scenarios about like if you were in business on February 15th, so you weren’t the whole year, if you started your business on February 14th of twenty twenty, for example, if you have one of those special scenarios, work with your lender to figure out your reference period, because it’s real complicated and I figure most of us don’t fall into that, so. So let’s figure out which one makes most sense for you to choose. So. If you have employees, even if you’re the only employee, if you pay yourself through payroll, you file quarterly what’s called the IRS 941. So you’re going to take the 941. And on line 5C down here, taxable Medicare wages and tips, column one, whatever that number is, you’re going to write that down for each quarter. I would go. All four quarters in 2019 and all four quarters in 2020 and then. Figure out which one is higher. Is it 2019 or 2020 to calculate this? So you’re going to add up four quarters, either four quarters of 2019 or four quarters of 2020 that you’ll be using. So, again, you can choose either one of those or the 12 months before your loan. So to this total, you’re going to add any employee contributions for health insurance or other benefits like dental disability vision and group life insurance, so any of those contributions you’re going to add to that number. So you’re going to get a 12 month number of how much you spent on payroll, plus how much you spent on group health insurance or any of those other fringe benefits. And you’re going to add that number up so you’ll get a number there for the year. Then any number, if you have any employees, including yourself, that you pay over $100,000, you’re going to subtract whatever you paid that employee above $100,000. So, for example, if you paid yourself $140,000 over those four quarters, you’re going to subtract $40,000 from that because the max per employee that you can claim is $100,000. You’re also going to subtract any salaries that you paid to somebody whose primary residence is outside of the United States. So if you have an employee in Canada, for example, you’re going to subtract anything that you paid to them. So we’re following so far? It’s mathy and I’m a writer, so, OK, let me just see. [00:43:39][325.1]

[00:43:41] All right, perfect. [00:43:41][0.4]

[00:43:42] OK, so once you have that number, your your 12 month number, you’re going to divide it by 12, you’ll divide it by 12 and that’ll give you your average monthly payroll. You’re going to write that number down because you need that number for the application. So your average monthly payroll is going to be the total year divided by 12. Then to find out how much you’re eligible for, it’s your average monthly payroll multiplied by 2.5. That makes sense? So divide that number by 12, multiply by 2.5, and that’s your estimated loan amount. Again, that’s an estimate. Work with your lender and they can help you with special scenarios or things that may reduce or increase how much you would be eligible for. But that’s kind of the general. So nobody’s yelling at me in the chat or Q&A is not blown up. I think we’re all right on that so far. [00:44:33][51.0]

[00:44:34] So let’s move on to scenario two, which is the majority of you, which is you claim your freelance income on your personal tax returns. So this is going to be sole proprietors. And many of you probably that are in the not sure category sole proprietor is what you’re assigned if you don’t create a business entity. So the IRS categorizes you as what’s called a sole proprietor. So if you have never set up a business entity. But you claim the income from your business, you are a sole proprietor and then some LLC is like I said, if you don’t file LLC tax as a corporation, you put it on your personal tax return. So you file one tax return a year. This is going to be you. So we all following keep checking in because I get my Yes. L.L.C. flow through a scenario 2. Exactly right. So if you are an LLC and 2020 are an SCORP in 2021. So 2021 taxes are not even like those are the ones you’re going to file next year. So if you were an LLC last year, if you put it on your personal tax returns for 2020, then you’ll be in this scenario two. If you’re filing corporate tax returns this year, talk to your accountant about which one works best for you in your specific scenario. Talk to your your accountant or your or and aware your corporate attorney. OK, so scenario two, this is a lot simpler, like I said, they made it stupid simple for freelancers and so reference periods you can use, there’s only two of them. It’s calendar year 2019 or calendar year 2020. So you’re going to use your schedule C on your tax returns. Most of us are probably going to be using 2019 because you probably have not filed your 2020 taxes yet. But if you have created your tax returns for 2020 you can use that. The only scenario I would recommend using the 2020 tax returns is if your your line 31, your gross or your net profit is higher in 2020 because that’s the number you’ll be able to get a higher amount. So for most of us it’s going to be calendar year 2019. So grab your 2019 taxes, you’re going to look for a form that looks like this. This is obviously the 2021 but it will say schedule C up on the top left corner, “Profit or Loss from Business”. So it’s going to be a few pages into your tax returns, but you’re going to look for this Schedule C Profit or Loss from Business. So if you claimed any freelance income, this is where this this went, on your schedule C, if you don’t have a schedule C from 2019 or 2020, then you are not eligible for paycheck protection program. [00:47:32][178.0]

[00:47:32] So that’s how the IRS classified freelancers, it’s people that that claimed income outside of employment, which should be profit or loss from business on their tax returns. So give everybody kind of a moment to find this for your taxes. I’m going to take a sip of water, find that, and then if you have questions in the Q&A box and we’ll go through the calculations for you. [00:47:54][21.1]

[00:47:59] OK, so, Rebecca, you at a loss on your schedule C, so, no, you are not eligible unless you have a profit in 2020. Then again, I would recommend, if that’s the scenario that you file your 2020 taxes as soon as you can and then apply. But the reason that you don’t qualify if you had a loss in 2019 is because think of the intent of the law. The intent of the paycheck protection program was to keep Americans employed. Paycheck Protection Program, protect the American paychecks. So if you had a loss, that means that you did not get a paycheck, you did not get a paycheck from your business. And so there’s nothing to maintain or protect. And so, no, you are not eligible if you have a loss. So we are looking at line 31. So net profit or loss again, if this number is negative, then you don’t qualify. So you want to find this line 31. [00:49:02][62.3]

[00:49:04] Let’s see what we got for questions. [00:49:05][0.9]

[00:49:08] OK, Randi, same thing, negative total on line 31 then you are not eligible. Yeah, so line 31 has to be a positive number for you to be eligible. If you have a couple of schedule Cs, would you add them up together? Yes. OK, so line 31, so you’re going to take that number. All right, let me see what else we got for Q&A. I assume zero on 31 is also ineligible? Yes, and once we do this calculation, you will see why. So you’re going to take that number if it’s over $100,000. So if you made more than $100,000 profit on your business. Number one, I would recommend hiring an accountant to get those profits down because that’s all taxable. So you pay 40 percent self employment tax on that number. So that’s the first thing I would say. But if that number is over $100,000, the max you can do is $100,000 so if that number is $125,000, just use $100,000 for the calculation. So you’re going to take that number, divide it by 12 again. If it’s zero, that’s still going to be zero, then multiply it by 2.5, which would still be zero. So you would be eligible for a zero for your loan amount. So. For a lot of us, you’re going to take that number, divide it by 12. That’s again, your average monthly profit, that’s your monthly payroll for for the purposes of this. And then multiply it by 2.5 Is your loan amount. So hopefully everybody can kind of figure it out from there on what you could be eligible for. Again, work with your lender. There are special scenarios that raise or lower that number, but for the most part, it’s going to be line 31, divided by 12, multiplied by 2.5. So let me just check in to make sure we’re all following. Yes, exactly right, Rebecca. So, yeah, exactly. So your total number is 60K divided by 12 is $5K and then $5,000 times 2.5 And you would be eligible for $12,500. That’s exactly right. That’s that’s exactly how that calculation works. You will have to on the application process, put that $5,000 as your average monthly. So keep both of those numbers. But yes, your total total amount is to be twelve thousand. So again, since you have a profit in 2020, you have the option of using calendar year 2020, file your taxes as soon as you can so that you can apply using that schedule C. [00:51:52][164.0]

[00:51:54] OK, so now that we’re all caught up on what we could possibly be eligible for, let me walk you through what the application looks like and what to expect there. It’s a very simple application. If your loan is less than two million, which is good to the vast majority of us, the it’s way, way simpler. So this is the first page of it, so basically it’s just your basic business information. So which one of these you are? Again, you are going to be a sole proprietor in most situations. If you have not set up a business entity, your of establishment, it has to be before 2020, it could be 2020 if you started in January 2020, your business, legal name, address, all of that fun stuff, your NAICS code. We’re going to talk about what your NAICS code is and where to find it, the average monthly payroll. So that’s that. So you got your line 31 divided by twelve. So this is the divided by twelve number and then you’re multiply it by two point five. Unless you have a NAICS code in the 72 category, which is probably not going to be most of you, this is somebody that owns a restaurant or theater or there’s a couple of different ones. But for most freelancers it’s going to be 2.5, almost all of them, actually. So I wouldn’t worry about this 3.5. That’s for they give a little bit more money to restaurants basically is the thing they’re. How many employees you have, the purpose of the loan, so you have to checkmark, at least one of these, but check mark as many of them as what you think that you’re going to be spending on so covered worker protections is like getting PPE for your employees. And I wouldn’t put other there because it’s just going to delay your application if you have payroll costs, rent and mortgage, utilities, operations expenditures. I would put that. I wouldn’t put other just because that somebody else. That’s got to make another decision on that. If you had a first draw, you’ve got to put your phone number there, and this is for. If you have more than a loan more than $150,000, which means you’re making more than what, fifty thousand dollars a month, something like that, I can’t do math that quickly. You can leave that blank. So if you’re a first draw borrower and you want to leave that blank. And then if you have multiple owners, you got to put anybody that owns more than 20 percent of your business and then basically say that you haven’t committed fraud or stolen money from the government or that you’re doing illegal stuff. So is the United States where you live and then most of us are not franchises. So those will be. No. And then these are the certifications that we talked about. So you basically have to certify that you are a business, you are in the United States, that you’re going to comply with all the regulations, all that kind of stuff, and that you’re not your business doesn’t do something that’s illegal again, circled. You saw this side before. The big one is the necessity. And then just basically that you follow all those eligibility requirements that I talked about and that you are not applying for more than one loan. So this came up with confusion as well, because I actually got this advice and thankfully didn’t follow it in the first round that apply through multiple lenders to see who can get you in the fastest. Do not do that. Apply with one lender because you are not allowed to apply more than once. And then. Yeah, so basically you go through this, look at these carefully, make sure you that that you can certify all this stuff and then its signature and that’s it. So very simple application. [00:55:59][245.5]

[00:56:01] It seems complicated, but if you’ve ever applied for other types of loans or other SBA programs, it’s much more complicated than that. So they made it simple on purpose. [00:56:11][10.1]

[00:56:13] So one note is, if you got a first draw, you can amend that based on the new rules. [00:56:21][7.9]

[00:56:22] The big change in the new rules that you might want to amend with is that they added in group life, disability, vision and dental insurance to calculations. So if those things are a big expense for your business, you can go back and get more out of the first drawer and then get a second drawer as well. We pay in my company. The only one of these that we pay is disability insurance and such a small amount monthly that I could get a couple hundred dollars more with my first draw, but it’s just not worth the headache of going back and doing that. [00:56:54][32.1]

[00:56:54] So just kind of, again, analyze what makes sense for your business. So let me see questions. Under a number of employees, am I counted? Yes, so you’ll put one if you’re a sole proprietor, freelancer, you have one employee, that’s yourself. [00:57:09][14.7]

[00:57:13] Purpose of the loan checkbox categories are all covered expenses for forgiveness, we’re going to go through forgiveness in the next section, so I will cover exactly which categories some of them are. But it depends on your situation. If we are the only one working in our company when we technically be employed, yes, if you’re a freelancer, that sole proprietor on your schedule C, you have one employee, that’s yourself. For a sole proprieter with employees, when I add my schedule C plus the 941 numbers, yes, because it would be you as an employee and your 941 employees, that is, if you’re not included in those 941. So if you are included in the 941, so you pay yourself a payroll that would be double dipping of like you pay yourself a payroll and then you pay yourself as a as a freelancer 1099 it you can’t do both. Can I talk to my health insurance as an independent contractor? No, it’s only group health insurance. So if you provide group health insurance benefits to your employees, it counts. But if you’re just the sole proprietor and you pay your own health insurance out of pocket, even if you pay it through the marketplace does not count as a payroll expense. [00:58:35][82.1]

[00:58:38] OK, so. [00:58:39][0.9]

[00:58:41] NAICS code, so this is a question that I get a lot of, what is my next code and how do I find it? So NAICS is just stands for North American Industry Classification System. It’s basically what the government uses for any statistics that you find in business. So if you find like fastest growing industries, a lot of times that comes from people entering their NAICS code and different things. It’s, you know, how when you fill out something as like just a regular person, you fill out like your gender and your ethnicity that’s used for data for the census of different income things, NAICS is like that for businesses. So it classifies you based on the type of work that you do so that the government can figure out what programs are needed, what industries we have in the US, all kinds of data it uses. So you can find your next code at NAICS.com/search. These are a few that in my community are common NAICS codes, I put them together for you. Most of us are going to be in 54. That’s business services. If you’re an artist or entertainer, there are different ones. So I just put up a few here. I’ll share my slides with you when I send out the recording so you can grab these. The one that I use is five four one six one eight – other management consulting services. The bulk of my revenue comes from coaching freelancers. So it’s basically as a management consultant for freelancers. The thing with NAICS is that you want to put the code that’s closest to the industry that you have. So most of the time, the SBA does not like when there’s, of course, other code for other. They don’t really like when you put that. So see if you can find one that’s very close to what you do. So, for example, if you’re a wedding photographer, you may be photography studio’s portrait. Do you really do portrait photography? No, but it’s close enough that for the government’s purposes of keeping track of which industries are doing well and which are not, it’s going to fit into that same category. So copywriters are going to go in “other services related to advertising.” There’s not a copywriting specific code, but I encourage you to look up your next code by searching. And and if you fit into one of these categories, you can use that. So that’ll be something that’ll come up whenever you try to do a government program or in a lot of different things. When you apply for grants, sometimes it’s only for certain NAICS code. I mentioned NAICS Code 72 is getting 3.5, multiple of their monthly revenue. NAICS code 72 is restaurant industry basically. So, so that’s what the code is. Is there any questions on that before move on from NAICS Code. Let me just double check. [01:01:41][180.4]

[01:01:45] Barbara, what if I don’t have any pay paid employees, would I still be able to get PPP again? That depends on your situation. So if you’re a corporation that does not have any payroll, no, the corporation cannot get P{P. But if you have a Schedule C and you track your income, your freelance income on your personal tax return, you don’t need to have employees. You’re counted as kind of your own employee. So can I count the money I paid 1099 as a sole proprietorship? No, because that wouldn’t go on your 941 is a payroll expense. So if you’re a sole proprietor, the 1099, the money that you paid 1099 employees would go on your schedule C anyway. So it’s already kind of logged in there. But no 1099 do not count as payroll. It doesn’t count for a corporation. If you’re a corporation and you pay out freelancer’s, it doesn’t count towards what you can get because freelancers can apply on their own. So those people that you give the 1099 to, they can apply for paycheck protection program. So you can’t apply on their behalf if that makes sense. OK, so forgiveness, a lot of questions about forgiveness, so I’m going to run through it. I will put the caveat that the final forgiveness applications have not been released by the SBA yet. [01:03:16][90.6]

[01:03:17] They kind of had to work their tail off in the last two weeks to get all the regulations updated, to get the loans out. [01:03:22][5.6]

[01:03:23] So but we will talk about what we do know about forgiveness. So. A few simplifications. So Schedule C borrowers, so those of you that are sole proprietors, which is the majority of you, do not need to provide expense breakdown. So this is great news for you. Your loan is pretty much automatically forgiven. You don’t need to explain what you spent on rent or anything like that, which is awesome. So like I said, Schedule C people that put their freelance income on their personal tax returns, this has been great for them because the calculations are super easy. You need one form, your tax return, and the forgiveness is super easy. Loans less than $150,000 do not need to provide documentation with their forgiveness application, except maybe the 25% percent quarterly reduction for second draws. We’re not sure on that yet because it’s kind of unclear. Like amazing. But this bill that was passed in Congress is not super clear on every single detail. So and again, the SBA has worked really, really hard to get the loan applications out. So the forgiveness applications were not sure all the rules on that yet. And so the lawyers that I talked to, Alan Gassman and his law firm, made a recommendation, which I think is great, which is just because you don’t need to provide the documentation or the expense breakdowns for your forgiveness application, keep them anyway and track them for your own purposes. Because, again, if the IRS gets involved or something else later down the road that we don’t know about, it’s good to just have that documentation for yourself. It’s not required to submit with your application, but it’s good to keep track of. So, for example, up until this simplification was made just this week, the application required that you submit your payroll reports for the covered period of the loan. That’s not the rule anymore, but it’s still really a good idea to hold on to that documentation. Loans less than $50,000 do not need to do not need to prove employee headcount were retained. So there was a rule in the first round that you couldn’t lay off workers if you got paycheck protection, you had to maintain and then you got penalized on the forgiveness. If you laid off workers for loans less than $50,000, you don’t need to worry about that, which isn’t probably applicable for most of us. But it is nice simplification. There is a simplified form coming for loans under $50,000. So there has been three, I think, changes to the forgiveness application so far and every time they get simpler and simpler per the bill that was passed in December, the application has to be one page. So it’s probably going to be as simple as the loan application that I showed you, if not simpler. But that hasn’t come yet. So we’re not sure what that looks like. There is an EZ form that’s out there, but it’s still more complicated than this next form is going to be. So you have 10 months from the time your loan was distributed, so for many of us, this was May or June, you have 10 months to apply for forgiveness. So if you have if you’ve got a first dra and you have not applied for forgiveness yet, I would wait until the new form comes out because it’s going to be simpler and there’s less documentation that you’re going to need to do. So, that’s what we know so far. So like I said, for Schedule C borrowers, you’re almost automatically forgiven. You don’t need to provide expense breakdowns. But for corporations, here’s how the covered expenses. So 60 percent of the paycheck protection program needs to be spent on the category of payroll expenses. And so this is all these things. So salaries, most of it should be covered in salaries because the way that it’s calculated is you have twenty four weeks. So twenty four weeks is how many months? That’s almost six months. Right. So you have six months to spend what you would average two and a half months of salary, if that makes sense. So the way it’s calculated is your monthly payroll multiplied by two and a half. So for twenty four weeks after you get your loan, you should be able to spend the majority of it on salaries. But here’s all the things that in the 60 percent have to be spent or could be spent on salaries, tips, payroll taxes, paid leave for employees, group health insurance, retirement plans, life insurance, disability vision or dental. So all those things have to make up 60 percent. If you don’t spend it on those things, your loan, you’ll have to pay back part part of it. Forty percent of it can be paid on rent, utilities, and then for new categories from this bill, property damage. So this is property damage. If you were in a zone that had rioting. So if there was riots and you had to fix a broken window, you can spend it on that protective equipment for your employees. So masks, dividers, anything like that. This one, which I love expenses for moving your workforce online. So your zoom license, your customer management software, your e commerce site, anything that allowed you to move your workforce online is a deductible expense. And there’s this weird category called “other covered operational expenses,” so if you saw on the application, that’s how it’s worded, other operational expenses. Operational expenses could mean anything, so we don’t know what the SBA means by this yet, so I wouldn’t list it, you should be able to cover one hundred percent of your loans in these categories. So when you’re tracking your expenses for forgiveness, I wouldn’t include anything that’s not on this list because, I mean, operational expenses technically would mean like meals and entertainment. Right? But we don’t know what the SBA is going to categorize as “covered operational expenses.” So we do know these very specific categories. So as much as you can do salaries, you’re going to be fine. So before I move on to the EIDL, any other questions, we have two businesses, each with different schedules and each are an LLC. We borrow as only one of the businesses. [01:09:58][395.4]

[01:10:00] Can we borrow is only one of the business instead of averaging the two schedule losses. [01:10:04][3.5]

[01:10:06] Yes, so, yeah, you can you can always do less like, yeah, so you can just do one of the LLC’s for sure and then do we need to check. So if you’re an LLC, then check LLC on the application. Can we omit one of the businesses? [01:10:24][17.3]

[01:10:26] One was positive and one was negative if they’re on the same tax return. [01:10:30][3.9]

[01:10:30] I’m guessing probably not, but I would talk to your accountant or your lender about that because, again, that’s one of those specific scenarios that I did not stay at a Holiday Inn Express last night. So I don’t want to give you legal or tax advice on that one, because I’m not sure. [01:10:49][18.5]

[01:10:51] All right, let’s see what’s happening in the chat. [01:10:53][2.6]

[01:10:55] OK, perfect, so let’s talk quickly about EIDL, so I want to start with the EIDL. [01:11:03][7.9]

[01:11:04] I kept calling it a “preexisting condition” because that’s what came out of my mouth. But basically, paycheck protection program was designed for the pandemic. EIDL was not as it is a preexisting SBA program. If you have ever tried to do anything with the SBA, you know, it’s fairly complicated to other than the paycheck protection program because Congress was basically like, “SBA. You need to make this simple for people.” EIDL is much more complicated because it was not designed for the world that we live in currently. It was designed for businesses that were in disaster zones. So you were in New Orleans during Hurricane Katrina and your business got flooded and now you need a loan to rebuild. That’s what it was designed for. So it’s called the Economic Injury Disaster Loan. It got shoehorned into the CARES Act because the Congress was like, “hey, SBA has a program, let’s just adapt that program for this weird situation that we all find ourselves in.” So it doesn’t work as smoothly as paycheck protection. And if you got an advance this year, you know that because you were told like five different amounts that you might get early on in the program. So briefly, EIDL advance, or sometimes it was called the EIDL grant. Basically the same thing was ended up being a thousand dollars per employee. So what happened is a bunch of people applied for these loans and Congress said you’re going to get a big chunk of this money as a forgiveable it’s going to be forgiveable part of this loan and you’re going to get it faster. And it was up to $10,000 was what everybody was promised. I’ll tell you my experience with that, so I applied for the loan. Before the loan was even approved or anything, all of a sudden I had $3,000 that was deposited from the SBA into my bank account, and I had no idea what it was for. I hadn’t signed any of the loan paperwork. I’d signed the application, obviously, but I hadn’t signed the promissory note on the loan. I hadn’t done anything. I had no idea what this money was. This happened for a lot of businesses where they were like, I mean, cool, but what is this money? Do I have to pay it back? What’s the deal with it? They took the number that you wrote on how many employees you have, and then they gave you a thousand dollars per employee, so if you’ve got that awesome, it’s not taxable revenue and you don’t have to pay it back. So that was like a three three thousand dollars that you don’t have to does not count as taxable revenue on your business, which is awesome. [01:13:43][158.5]

[01:13:44] So. [01:13:44][0.0]

[01:13:46] If you’ve got an EIDL Loan, which would have come after that, you do have to pay it back and so you don’t have to pay the advance part of it, but you do have to pay the loan back. It’s really great terms for a loan, but it is something you have to pay back. And there’s this awful caveat in there which is very important to pay attention to if you’ve got the EIDL loan. Because basically, the SBA says you cannot pay any bonuses to your employees, you can’t take any owner dividends or owner distributions, you can’t give any extra gifts to your employees or anything like that. So if you had like a great December, but you haven’t paid back your EIDL loan yet, you cannot use that money to pay any bonuses to pay yourself extra, to get extra gifts for your employees, anything like that. So that is a big caveat for a lot of us if you have the EIDL loan. So I would talk to the SBA, know that in the next couple of weeks, it’s probably going to be impossible to get a hold of the SBA. But this one was a little complicated. So if you’re not sure if you’ve got the EIDL, the EIDL was through the SBA website. It did not have to go through a bank or a lender when you applied directly to the SBA. So if back in April you applied directly through the SBA and you got money from them, it was likely EIDL. It could have been another program, but it was likely this one. If you went through a bank, it was likely paycheck protection program. But you should look up your loan documents and see which one you got, if you’re not sure. So the new act that was passed in December introduced a whole other EIDL grant, which is so confusing, is for businesses in low income areas. So, again, just like the banks that serve women and minority owned businesses, we don’t quite know what that means yet. So likely the federal government has zip code searchable database of zip codes. You can look up to see if you’re in what the government calls an economically depressed area based on your zip code. That’s likely what the SBA is going to use to determine if you can get one of these grants is if your business is in one of these economic zones. But we don’t know yet. So I’m assuming that the SBA is not going to create a whole other spreadsheet of zip codes or areas, but who the heck knows? So we don’t know anything about how this will be distributed, how you can apply, how any of this works. And somebody asks about credit earlier. Credit does apply for loans. They do check your personal credit score collateral. All that stuff works like a regular loan. The grants you typically do not. [01:16:41][174.9]

[01:16:41] But we don’t know what this new low income grant that again, should be coming shortly. But the SBA as of this morning hadn’t released any guidance on that, likely because they were under a lot of pressure to get the paycheck protection program up and running. [01:16:57][16.0]

[01:16:58] So. [01:16:58][0.0]

[01:17:00] That is my spiel. So we actually took less time than I thought, I was worried this was going to be like a three hour thing. But if you guys have more questions, feel free to pop them in that Q&A and I will try to answer them. As best I can, so my my biggest recommendation is talk to your bank over the next couple of days and find out if they are an SBA lender, best route to go is to work with the bank that you have a business bank account with already. It makes things a lot easier. [01:17:32][32.9]

[01:17:34] But like I mentioned earlier, there’s a lot of different options for lenders to go through. [01:17:38][3.5]

[01:17:40] Awesome, thank you, Lanting, I appreciate that it was helpful. [01:17:42][2.1]

[01:17:45] Can you get a second EIDL this year? Probably if you live in this low income, you probably still qualify for the low income grant, low income area grants or whatever they’re calling it, but we don’t know yet. [01:17:57][12.3]

[01:18:00] Awesome, Alex, glad to hear you got your questions answered. Awesome. Perfect. Let me see, there’s another question. [01:18:08][8.7]

[01:18:09] Would I be eligible for EIDL with a negative line 31? Yes. so that has nothing to do with the paycheck protection program. That’s calculated totally differently. The EIDL is, though, based on credit and that kind of thing. So talk to your or look at the SBA guidelines on the EIDL loans, the grants. We don’t know again how they’re going to be distributed. The first round of grants is already done with. But stay tuned to the SBA on the ideal low income area. [01:18:43][34.4]

[01:18:46] All right, let’s see here. Anything else awesome. [01:18:51][5.0]

[01:18:52] Well, glad you guys got some clarity. I will be sending out the recording and the slides so you can reference them. Please talk to your accountant, talk to your banker, and hopefully there’s a bunch of you that will get some money from the government. I always think I was thinking I should wear that, that the guy that wear the money suits and like, had the books was like “Free Money from the Government!” That I should have worn that today. But so hopefully this was this was good for everybody. And I will talk to you soon. Have a great one. [01:18:52][0.0]

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