Self-employed / small business / self-employed people who received PPP loans can be forgiven for wanting to forget all about the PPP loan program.
The number and complexity of changes that have happened with the PPP loan program has been absolutely mind-blowing. And we believe it’s likely that even more changes are coming soon.
It’s November of 2020 right now, we are about to head into the Holiday season, and this has been the most exhausting year ever for small business owners. Trust us, we are feeling that same sense of exhaustion! Remember, we had to deal with hundreds of PPP loan situations as our small biz clients scrambled to obtain these crucial PPP funds.
The temptation, then, is for us all to forget about these PPP loans until we are forced by the PPP lenders to “deal with it.” Meaning that the lender forces us to apply for PPP loan forgiveness or else they’ll make us start paying the loan back or take some other adverse action. Most PPP loan borrowers appear to be taking a “wake me up when I need to do something” approach.
While totally understandable, pulling the “ostrich maneuver” (head in the sand) could be a BIG mistake when it comes to PPP loan forgiveness…
Examples of How PPP Loan Forgiveness Failures to Plan Can Be Costly
Most businesspeople are familiar with the famous Benjamin Franklin quote, “Failing to prepare is preparing to fail.”
For many PPP borrowers, that isn’t necessarily true. Many PPP borrowers can do absolutely no planning and still achieve 100% PPP loan forgiveness. If that’s you, congratulations!
However, many other PPP loan borrowers are assuming we’re in that “I can afford to do nothing” category, but we’re actually not in that category. Meaning, simply, that many PPP loan borrowers are not aware that failure to plan is going to result in failing in the mission of achieving 100% PPP loan forgiveness.
Here are the most common and costly PPP loan planning failures we are seeing right now:
- Failing to spend at least 60% of PPP loan on payroll expenses
- Failing to “utilize” your PPP payroll spend in a way that actually makes sense for your business, e.g. paying out payroll to employees who aren’t doing productive and profitable activities
- Failing to properly categorize expenses on your accounting records so that they are optimized for PPP loan forgiveness (how you “name” an expense can affect your PPP loan forgiveness more than you know)
- Failing to retain proof of your PPP loan expenses (have you read through the “scary” language included in those PPP loan agreements about your obligation to only use PPP loan funds for purposes acceptable under the program rules?)
- Failing to develop a relationship with a PPP loan expert who can give you access to the “pro level” tips & tricks if needed (again, not all PPP loan borrowers will need pro level tips, but if you do need those, you want to have a relationship already working because true PPP loan experts are incredibly busy and we are only getting more busy by the day)
If you haven’t properly planned those items shown above, no need to blame yourself or “feel bad.” This whole program is completely new for 2020, nothing like this PPP loan program has ever occurred in American history. And the PPP loan program has changed approximately one million times (slight exaggeration, but you know what we’re saying) so seriously, no need to blame yourself if you haven’t evaluated the PPP loan forgiveness planning pointers listed above.
Instead of blaming ourselves or feeling bad, let’s look at what actions we can take as small business owners to NOT be saddled with another debt heading into 2021, and instead do everything we can to get 100% PPP loan forgiveness.
The last thing any small business owner needs nowadays is another bill to pay!
What To Do Now If You’re Possibly Looking at Less than 100% PPP Loan Forgiveness
If you’ve read to this point of this article, it means that you’re concerned that you might be saddled with an unwanted PPP loan debt heading into 2021, am I right?
You are interested in making sure that you do everything you can to achieve 100% PPP loan forgiveness, correct?
So, let’s get to the point here: what can you do to make sure you get 100% PPP loan forgiveness?
Well, as usual in the highly complex world of business financial matters, it depends.
The actions you can take to achieve 100% PPP loan forgiveness will be different depending on your individual facts and circumstances. A PPP loan forgiveness tip that will work for you won’t work for someone else. And vice versa.
The truth is:
There is no “one size fits all” plan for how to achieve 100% PPP loan forgiveness.
The first and most urgent step is to get visibility NOW into whether or not you are looking at a PPP payback instead of the “free money” that you thought you were getting.
If you’re NOT in danger of owing back your PPP loan, fantastic! Please eat your Thanksgiving turkey dinner and fall asleep in peace.
If you ARE in danger of owing back your PPP loan, now is the time to get visibility on how much of your PPP loan you might owe back–and evaluate options of what you can do to not owe back anything on your PPP loan (using legal and ethical planning strategies, of course).
All “covered periods” for PPP loans end December 31, 2020, meaning that your options for actions to take after that date are going to be severely reduced.
To help self-employed / small business / entrepreneur people with this crucial issue of PPP loan forgiveness help and PPP loan forgiveness planning, we have placed this free PPP loan forgiveness software tool on our website so that you can check up on your PPP loan and see if you are going to owe back part of your PPP loan or not, based on your individual facts and circumstances.
If you’re concerned about getting full PPP loan forgiveness, you can use this tool to give yourself the best chance at 100% PPP Loan Forgiveness.
We hope we can get to you in time to save you some money!
Thanks for listening and please note that this page has our office contact info in case you want to talk directly with one of our Pronto Tax Pros who are trained on PPP loan forgiveness to set up your account on our system (ask for Cynthia, Ingrid, or Imelda if you call).