So, we went through the first dash of getting whatever documents our banks asked for, submitting it as fast as possible, and then playing the waiting game just to find out the money had been diverted elsewhere. As a Floridian this kind of felt like putting up shutters and waiting for a hurricane that never came!
Well as business owners we are tougher than to let them get us down, RIGHT?!?! The statement still stands though, show US the MONEY!!
What we know:
- The first push of PPP has been gobbled up as quickly as we found out about it.
- 1.66 million applications were approved, for $342.3 billion out of the $349 billion allocated.
- The average loan size was $206,000 as reported by The Motley Fool.
- The National Federation of Independent Business (NFIB) estimated that 70% of small businesses attempted to apply for a PPP loan, and 72% of those that tried successfully submitted an application.
If you were one of the successful businesses which were approved and funded PPP, CONGRATS!! We hope the program matches the expectations we all have and helps you ride the Covid-19 wave. If you were disappointed to know funds were exhausted like us, let’s look at the positive.
For one, Congress is attempting to agree on a deal which would fund PPP numero duo. Hopefully this will allow Sole proprietors and contractors to see some of the money. Two, while there were some very questionable businesses like Ruth’s Chris receiving VERY large amounts of PPP, the majority of the funding went to non-publicly traded businesses. This should give us hope for the second round.
What we don’t know:
- When will congress decide to “help” the little guy again?
- How much will be allocated in the second round of funding?
- How quickly will the funding be exhausted?
- Where to write your “thanks for nothing” letter?
The issue for Sole-Proprietors and 1099 contractors in the first go-around was multifaceted. PPP opened for them one week after 941 filers (payroll tax) on April 10th, SBA did not issue guidance until April 14th delaying applications further, and allowing publicly traded companies over $30.9 billion in funding is a bunch of…
The Senate has already approved $310 Billion for PPP, it is now in the House of Representatives hands to finalize or negotiate. The House is said to be voting on it as early as this afternoon. By conservative estimations, a minimum of $1 Trillion would need to be funded in order to cover everyone. This means get your applications READY! If you already submitted your application to an SBA approved lender, make sure everything is in order and there are no outstanding items. If you have not, call your banker and see if there’s anything you can do ahead of time. At bare minimum, have your documents in order.
For 941 filers (payroll tax), check out our “Get your PPP” article for a list of all the documents you may need.
For Self Employed, Sole Proprietors and 1099 Contractors this is the SBA guidance which was issued on April 14th.
- 2019 Schedule C. Most notably, Schedule C filers need to have a completed 2019 Schedule C, whether they have filed a 2019 federal income tax return or not. If you do not have a completed 2019 Schedule C, reach out to your tax professional to request one. Significantly, the new SBA guidance suggests that the 2019 Schedule C does not have to be filed as of the date of the PPP Loan application—however, the guidance is explicit in indicating that a 2019 Schedule C must be provided in order to determine eligibility and loan amounts.
- 2019 Forms 1099. If you are self-employed or an independent contractor, it is likely you received Forms 1099-MISC with respect to your 2019 payments from third party payors. The new SBA guidance indicates that you will be required to provide a copy of any 2019 Forms 1099-MISC with your PPP Loan application. If you did not receive a 2019 Form 1099-MISC or lost it, you could consider reaching out to the payor(s) to request additional copies. If that does not work, you could try to substantiate any payments you received in 2019 that would be subject to 2019 Forms 1099-MISC information reporting through your 2019 bank records.
- Evidence of Business Operations as of February 15, 2020. Only businesses with operations as of February 15, 2020, qualify for a PPP Loan. To prove this requirement is met, the new SBA guidance indicates that you will need to provide 2020 invoices, bank statements, or other sufficient evidence.
- Schedule C Filers with Employees. Finally, IF you had employees in 2019, you will need to provide copies of all IRS Forms 941 and 940 for 2019. If this applies to you, go to our “Get your PPP” article as well.
At this moment there is no indication if there will be the third round of funding. This means for those of us shut out on the first round, let’s overload them again! If we get shutout again, there are 535 members of congress you can write your “thanks for nothing” letter too!