Episode 221: Will My PPP Loan Be Forgiven?

Many of you have gotten a PPP Loan with hopes that it would be forgiven. Currently, the 28 weeks have passed and you might have started to see some people starting to say my loan was FORGIVEN. What is this all about and how can you do the same? This week, I moved my regularly scheduled content around to get you this time-sensitive topic. I reached out to Linda and Trevor who have over 60 years of experience combined in the financial services industries. Linda Rey has owned, bought, and sold a business, and Trevor has managed multiple businesses. They have seen what works and what doesn’t work when it comes to business financing especially now with COVID. They have helped many people through the loan process.  The questions they answer: Where does one submit their completed PPP forgiveness application? What happens if someone received the SBA Economic Injury Disaster Loan (aka EIDL), how does this affect their PPP Loan? If someone was approved for a PPP loan and used 100% for payroll, why is there chatter of the SBA saying that they aren’t going to forgive $10k of the PPP loan because of the advance? Should I submit my PPP Forgiveness now or should I wait? I heard that PPP loans are going to automatically become 100% forgiven. Is this true? Biggest Takeaway You Don’t Want To Miss: The PPP loan forgiveness program allows for forgiveness, certain percentages of the amount of the loan, depending on how you used the loan under (eligible expenses) and the idea is that you do not have to repay the loan. If you had a grant for the EIDL loan and you received that grant, then when you go for forgiveness the amount of that grant will be subtracted, which converts the grant to an advance. There is chatter out there on the internet about people saying wait until you file is because the chatter and talk in legislation is that in a new round of stimulus potentially, Congress may repair this aspect of the PPP program with the grant not being forgiven. Bella In Your Business Show Highlights: 2:30 - What was the PPP for? 4:30 - How to get the PPP loan forgiven? 8:11 - What happens if someone received the EIDL and how does that affect the PPP loan from being forgiven? 12:17 - Why is their chatter that the SBA is saying they are not going to forgive the $10,000 of the PPP because of the advance? 15:30 - Should you wait to file for your PPP to be forgiven? 17:20 - Who is Linda Rey and Trevor? 21:23 - How much does Aurora Consulting cost? 23:50 - How to reach out to Linda Rey and Trevor? Links: https://auroraconsulting.biz http://youtube.com/lindareyandtrevor Did you enjoy the show? We would love it if you subscribed today and left us a 5-star review! Are You New Here? Welcome, I am so glad you are here. If you are a dog walker, dog sitter, cat sitter, doggy daycare or kennel owner, then you found the right place. Jump Consulting is the one place on the internet to get all the resources you need for your pet care business. Can I give you some freebies to generate sales and increase revenues for your business? Grab your freebies below. Are you starting out? Been in business for less than two years? Get your startup resources here. Do you own an established pet care business and you want to take it to the next level.? Get Your builder resources here. Transcript: This is episode 221 of Bella in Your Business. Hi there, I'm Bella Vasta from Jump Consulting. You might know me from CBS, NBC, Fox, Huffington Post, Entrepreneur, or maybe you've seen me speak on stage or read my book, The Four Dogs That Every Business Owner Needs. In any case, get ready because you're about to get your hashtag Bella Butt Kickin' in this next episode of Bella in Your Business. So what do you say? Let's get ready and jump. Welcome to another episode of Bella in Your Business. My name is Bella Vasta and today I've got a treat for you. You may or may not have heard some people starting to say that they got their PPP loan forgiven. Remember those loans that a lot of people applied for and got back in March, April, May, and June? It’s very confusing because I don't think the government really knows what they're doing, let alone the banks, let alone us. So, guys, we need some guidance. That’s why I literally—we just ended a whole video series and we’re sliding our friends Linda and Trevor into this podcast right now. I’m pushing everything back because this is timely information you need to know about, and I want to give you these resources. So without further ado, I’m welcoming Linda and Trevor to the show. They are small business owners who love other ambitious small business owners. They have over 60 years of combined experience in the financial services industry. Linda has owned, bought, and sold a business. Trevor has managed multiple businesses. They’ve seen what works and what doesn’t. When it comes to business financing, especially now with COVID, their tagline is “Financing Solutions for Your Business Success Story.” Welcome to the show, you guys! “Hey, Bella. Nice to be here. Thank you for the invitation.” I love your name, Vasta. “Thank you so much. Now I'm going to make some pasta in the kitchen.” That’s exactly how it all happened! I’m Italian and it was one of my nicknames, and that’s how it came about. You guys, we are packed full of dog walkers and pet sitters leaning in right now to hear what you have to say because this year has been challenging. Even businesses that were doing great and never needed loans or assistance are doing just that—whether they need it strategically or just to have it in their back pocket. A lot of people did that specifically with the PPP, and we’ll touch on the EIDL a bit. But before we dive in, give me a very short overview of what the PPP was or a reminder of what it was for. The PPP loans were the Paycheck Protection Program. It was dedicated to small business owners who needed to meet payroll so they could stay open and keep people employed. There were other allowable expenses, but the program’s purpose was to help employers keep people on the payroll and avoid mass layoffs due to COVID-related closures. There was also an advance component—oh, you can apply, you might get the advance, you don’t have to repay it. That was actually part of a different program: the Economic Injury Disaster Loan (EIDL), which has existed since 1953 under the Small Business Administration Act. It was originally for floods, tornadoes, wildfires, and other disasters, but was modified for the COVID pandemic to make access easier. Under the CARES Act, it included a grant of up to $10,000. Do you see why I have the experts on? Because already my question was off-kilter—it’s confusing! Add stress, depression, and trying to keep your business alive, and it’s hard to keep it all straight. So let’s dive in: people are asking for their PPP to be forgiven. How do they do that? That’s now a process with the lenders that funded the PPP loan. There’s an application with specific guidelines and supporting documentation—like payroll reports if you use a payroll company. The program allows for forgiveness of certain percentages of the loan depending on how it was used under “eligible expenses.” The idea is that you don’t have to repay the loan. By the way, the loan interest rate is only 1%, so it’s very cheap money—but you can get it forgiven. The problem is, the banks don’t have their act together yet. Some are sending forms and saying, “Let’s get this started.” Others are saying, “We don’t know what’s going on.” Then there’s chatter online—some say wait for the new stimulus, others say don’t wait. It’s very confusing. Some people have received forgiveness paperwork because their banks were organized. Those who used all funds for payroll found it easy to submit payroll reports—it’s simple: 100% payroll equals 100% forgiveness. I asked, “Which banks have their act together?” They said, “We can’t answer that—it’s all over the map.” Even within the same bank, there’s confusion. For example, one person with Bank of America got paperwork for forgiveness, another hadn’t even heard about it. What happens if someone received the EIDL loan—how does that affect PPP forgiveness? You can’t use EIDL money for the same expenses as PPP at the same time. For instance, if you used PPP for payroll in July, you can’t use EIDL for payroll that same period. You can, however, use it afterward or for other expenses like debt payments, business leases, or credit cards. If you got an EIDL grant up to $10,000, that grant is subtracted from your forgiven PPP amount. Meaning you’ll repay that portion at 1% interest. That’s been controversial because people thought the grant was free money. It’s actually a mistake in the CARES Act—Congress rushed the package and missed that detail. Still, they rolled it out quickly and helped many businesses survive. Bella noted that national unemployment is about 6%, down from 12%, so we’re not in a depression—though it sometimes feels like it. That’s why it’s important to have facts and experts like Linda and Trevor. So, if someone was approved for PPP and used 100% for payroll, why is there chatter that SBA isn’t forgiving $10,000 of it because of the advance? Because the EIDL grant—what many thought was free—is being subtracted from forgiveness. If you received both PPP and EIDL, and want PPP forgiven, that EIDL grant converts to an advance. Example: you got a $50,000 PPP loan, a $100,000 EIDL loan, and a $10,000 EIDL grant. You used all $50,000 of PPP for payroll. When applying for forgiveness, $10,000 is subtracted—so $40,000 is forgiven, and you repay $10,000 at 1%. That was shocking for listeners who believed the EIDL grant was free. Trevor clarified it only applies if you received the grant. Those who didn’t will have full forgiveness. However,