Any of you business owners taking part in PPP? (Re: Small business loans)

[Irongrip400]

Paycheck prevention plan. SBA is hacking loans for ten weeks of payroll, based off of last 12 months, and evidently if you don’t pay your people off or cut hours a portion or all of it may be forgiven. The paperwork just came out officially today, and is due back to your lending institution Friday. I’m not sure of the smoothness of how this program will run, having had my negative experience with the SBA, but I’m thinking this may go a bit better just because of what they’re trying to accomplish. Thoughts?

[theworm]

I’m doing it.   My payroll is about 50 k for 2 months.  My understanding is that if I take out 100, and use 70 (payroll, rent, insurance etc) then I only owe back 30. 
Why not?
If I don’t do it, may have to fire people or take out a loan anyway, so really not much of a risk for me.  I think interest rate is close to zero.
We will be ok, but if there’s a chance they extend this till mid June, I’ll get a little nervous then

[Irongrip400]

I’m doing it.   My payroll is about 50 k for 2 months.  My understanding is that if I take out 100, and use 70 (payroll, rent, insurance etc) then I only owe back 30.  
Why not?
If I don’t do it, may have to fire people or take out a loan anyway, so really not much of a risk for me.  I think interest rate is close to zero.
We will be ok, but if there’s a chance they extend this till mid June, I’ll get a little nervous then

I guess the government weighs the effects of a total economic meltdown with all of the unemployment payments vs. just paying us for keeping our employees for the next few months. I’ve got some things that it would actually be beneficial for me to handle in house if the labor is paid by Uncle Sam.

I’m hoping you make it through this.

[ARMZ]

I’m still thinking about it. The PPP is mostly made for the employee. 75% of the money has to go to payroll while your business is closed. 25% has to go to rent and utilities. You have to spend the money in 2 months to get the loan forgiven.
My employees are all collecting Unemployment insurance and they are happy with it. I don’t want to take a chance on the loan not being forgiven. I’ll have to pay out all that payroll.
If you’re wondering how much the loan will be, take your average monthly payroll expenses and times it by 2.5

[Coach is Back!]

The city is allowing us to stay open with a skeleton crew. We let them know that we were going to be providing masks and will delivering $500wk to food banks in our area, according to them that makes us a necessary business.

Our landlord is waiving our lease for 2 months which saves us almost $30k. We have cash flow through COD accounts and most of our 30 and 60s have either paid their orders up front and 50% and of course nothing retailers (into stores) are on hold and they’re cool with that. We’ll know more after the 30day extension, if it goes beyond the two months (waived lease) we may have no choice

[Twaddle]

The city is allowing us to stay open with a skeleton crew. We let them know that we were going to be providing masks and will delivering $500wk to food banks in our area, according to them that makes us a necessary business.

Our landlord is waiving our lease for 2 months which saves us almost $30k. We have cash flow through COD accounts and most of our 30 and 60s have either paid their orders up front and 50% and of course nothing retailers (into stores) are on hold and they’re cool with that. We’ll know more after the 30day extension, if it goes beyond the two months (waived lease) we may have no choice

Are you getting 2 months waived, or deferred? 

[Coach is Back!]

Are you getting 2 months waived, or deferred? 

Yes, you’re right. Poor choice of words on my part. Deferred.

[SF1900]

I hope Caliber Fitness Solutions, The Leader in Human Evolution since 2001, takes advantage of this loan.

[AbrahamG]

I hope Caliber Fitness Solutions, The Leader in Human Evolution since 2001, takes advantage of this loan.

Given Caliber's growth over the decades, I'm uncertain they could qualify for a small business loan.

[TacoBell]

I’m still thinking about it. The PPP is mostly made for the employee. 75% of the money has to go to payroll while your business is closed. 25% has to go to rent and utilities. You have to spend the money in 2 months to get the loan forgiven.
My employees are all collecting Unemployment insurance and they are happy with it. I don’t want to take a chance on the loan not being forgiven. I’ll have to pay out all that payroll.
If you’re wondering how much the loan will be, take your average monthly payroll expenses and times it by 2.5

I have a slightly different understanding of how the PPP works... I could be wrong but double check bc if my understanding is correct and your position is strong, there's really no reason not to apply...

Yes 2.5 x average monthly payroll up to 100k per employee.
25% can be forgiven if used to maintain 'some' payroll for the next 2 months.
After that it's a 10 year loan at 4%, with no payments for the first year.
And that's how its laid it now, things could change.
My opinion is to get the money now while they're giving it out.
If you have strong reserves it's an interest free loan that you can pay back in a year, effectively an advance on future sales.
Even on a small business market, this is a buyer's market, no reason to pass on the leverage.

[SOMEPARTS]

Accountant called and said from what he knows so far a sole proprietor could probably get a 10k grant. Haven't checked it out yet. Still working and happy to avoid it honestly.

[Irongrip400]

I’m still thinking about it. The PPP is mostly made for the employee. 75% of the money has to go to payroll while your business is closed. 25% has to go to rent and utilities. You have to spend the money in 2 months to get the loan forgiven.
My employees are all collecting Unemployment insurance and they are happy with it. I don’t want to take a chance on the loan not being forgiven. I’ll have to pay out all that payroll.
If you’re wondering how much the loan will be, take your average monthly payroll expenses and times it by 2.5

This is incorrect and I would suggest getting with your CPA and lending institution to go over this. It’s 2.5 times your monthly payroll average (I don’t pay rent just utilities), and whatever you use to keep your employees paid is forgiven. The balance, should there be any, is amortized over ten years at an interest rate not to exceed 4%. I sent my shit in yesterday after the amended application came out, and am expecting the bank to put it in motion today. They’re saying possible the end of April before funds are distributed.

[ARMZ]

I don’t fully trust this. Let’s say I participate and pay all my employees while my business is closed.
I use 75% of the loan amount on payroll as they require. Then use the rest of the loan on my rent and utilities. All in 2 months as they require. They evaluate my loan after 2 months and congratulate me on how I only have to pay back the loan with 1% interest. Fuck that!
This seems like the state not wanting to pay unemployment insurance.
I’d want a written guarantee that the loan will be forgiven if I use the funds correctly.

[Abelard Lindsey]

Mine is signing up as I type this.

We are definitely not shutdown. We are an OEM (the company) and system integrator (me). There is plenty of work for us.

[Irongrip400]

I don’t fully trust this. Let’s say I participate and pay all my employees while my business is closed.
I use 75% of the loan amount on payroll as they require. Then use the rest of the loan on my rent and utilities. All in 2 months as they require. They evaluate my loan after 2 months and congratulate me on how I only have to pay back the loan with 1% interest. Fuck that!
This seems like the state not wanting to pay unemployment insurance.
I’d want a written guarantee that the loan will be forgiven if I use the funds correctly.

Im thinking this and the fact they want people to have some money to buy necessities is why they’re doing it and why it will be wiped if used towards payroll. It’s probably cheaper to do it this way than deal with the fallout of the former.

[LurkerNoMore]

I don’t fully trust this. Let’s say I participate and pay all my employees while my business is closed.
I use 75% of the loan amount on payroll as they require. Then use the rest of the loan on my rent and utilities. All in 2 months as they require. They evaluate my loan after 2 months and congratulate me on how I only have to pay back the loan with 1% interest. Fuck that!
This seems like the state not wanting to pay unemployment insurance.
I’d want a written guarantee that the loan will be forgiven if I use the funds correctly.

This is where there is confusion.  My gf owns two life clinics (anti-aging, botox, body shaping, laser hair treatments, etc.).  She has 26 employees total.  So far what we have been told by various sources is :

1 - She would have to go back to the day of shutdown (March 17th here) and start paying her employees from that date forward.
2 - The loans are to be used for their full salary amounts.
3 - The amount of the loan is 2.5 x payroll requirements.
4 - If any employee is on unemployment compensation, then she can pay $274 per week or $548 bi weekly less (UE is $274 weekly here)
5 - If any employee is on unemployment compensation, then they must leave the enrollment program so she can pay their full salary herself.
**this where some confusing lies because UE is $274 per week, but we have read online that the Covid-19 Relief will also pay an additional $600 per week to employees through their unemployment claim.  However, this amount is not addressed in any form in regards to the above guidelines.**
6 - The loan is a 10 year loan, no payments for the first year and minimal interest the following year.
7 -  The loan is forgiven in 12 months if she shows she used it for employee retention and payroll.
8 - The loan is interest free for 12 months, then 12% interest the following year of any amount not paid back.
9 - The loan is actually a SBA loan by your financial institution and backed by the gov't.  Subject to lender availability.
10 - The loan is actually a grant the gov't distributes to your financial institution to be passed along to you at their discretion.
11 - The loan has to be spent in two months.
12 - If you go the route of the PPP and you receive it, spend it in 2 months like you are supposed to do, the 2 months passes and we are still shut down, then you DO NOT qualify for another one.
13 - If you go the route of the PPP, receive it, spend it in 2 months and it comes July and we are still shut down, the PPP becomes a small business loan with minimal interest rate and you may qualify for another PPP grant.
14 - It's a one time thing.  If we are still shut down in two months, you are fucked.

There is so much misinformation out there.  We went to 3 banks (ours and two others just to ask for info) and all three said different things about the same program.  No one really knows at this point I think.  They have a broad picture of it, but not the fine details.  We are just going to wait and see what happens when other people get one.


**Note - as of yet all her employees filed for UE on March 17th when they closed.  None of them has received a deposit yet.  So no way of telling whether the $600 additional is accurate or not**
** more confusion as most banks and info online don't really seem to know what the loan or terms actually consist of**

[visualizeperfection]

Waiting for XFactor to weigh in on this before I make an uninformed decision. He is our resident Gordon Gecko.

[Irongrip400]

Lurker, I feel her pain on the disinformation and confusion. I’m also wondering how they’re going to audit this or if they’ve actually thought that far ahead. The website was crashing yesterday I heard. It’s like when Obamacare came out. I’m thinking the bank loans the money and they’ll have irs employees do the audits over the next few months (since tax season has been pushed back) and whatever you don’t use for retaining employees, they roll into a loan.

I’ve got a backlog of work and am in an essential industry, but it has ground to a hault as far as some things go. Residential has slacked up, if only because the permits and inspections are not done in a timely manner.

[LurkerNoMore]

Lurker, I feel her pain on the disinformation and confusion. I’m also wondering how they’re going to audit this or if they’ve actually thought that far ahead. The website was crashing yesterday I heard. It’s like when Obamacare came out. I’m thinking the bank loans the money and they’ll have irs employees do the audits over the next few months (since tax season has been pushed back) and whatever you don’t use for retaining employees, they roll into a loan.

I’ve got a backlog of work and am in an essential industry, but it has ground to a hault as far as some things go. Residential has slacked up, if only because the permits and inspections are not done in a timely manner.

Yeah, for sure.  My gf is fortunate enough that she owns the property her two businesses are located on and owns most of the equipment (except for things like CoolSculpting machines).  So there is no rent.  But for some of her competitors, they have to lease the building and equipment they use.  The monthly lease alone is more than their payroll.  So having an 30% to use for rent isn't going to cut it with some of these companies.

[TheGrinch]

If your business isn't currently open..

Why in the world would you want a loan to pay your employees to sit home?

 

[LurkerNoMore]

If your business isn't currently open..

Why in the world would you want a loan to pay your employees to sit home?

 

So they can have food for one thing...

[Dave D]

If your business isn't currently open..

Why in the world would you want a loan to pay your employees to sit home?

 

Businesses have regular fixed expenses like you and me.

The idea would be so you can still pay operational costs (rent, utilities, insurance (and keep the semblance of being open)) without actually paying for them out of pocket, as the loan is forgiven if the amount is distributed correctly.

[LurkerNoMore]

Businesses have regular fixed expenses like you and me.

The idea would be so you can still pay operational costs (rent, utilities, insurance (and keep the semblance of being open)) without actually paying for them out of pocket, as the loan is forgiven if the amount is distributed correctly.

True.  However in this case, the money is supposed to be used 75% in paying employees.  Some small businesses have other expenses that greatly outweigh the amount of payroll they can claim.  Rent, liability insurance, utilities, equipment lease, etc.. with that in mind, does it make sense to get this grant when it only does the same thing that UE + the extra $600 weekly will do?

That is something a lot of business owners question.

[Dave D]

True.  However in this case, the money is supposed to be used 75% in paying employees.  Some small businesses have other expenses that greatly outweigh the amount of payroll they can claim.  Rent, liability insurance, utilities, equipment lease, etc.. with that in mind, does it make sense to get this grant when it only does the same thing that UE + the extra $600 weekly will do?

That is something a lot of business owners question.

Yeah I'm sorry I thought the question was why would you want to out the loan to keep your employees at home. I thought the benefits for the business was that it was all forgiven if 3/4 was used for payroll.

The benefit is the extra money in the business owners pocket correct, the other 1/4? Or does that have to be paid back?

Isnt part of the idea is that you can keep your employees insured as well? Obviously if it makes more sense to get UE plus the extra $600 then that would be the better option for the employee.

I was at the grocery store and I overheard one of the employees saying how the one time in his life he could make more sitting at home is the only time he has a job that wont lay him off, lol.

[LurkerNoMore]

Yeah I'm sorry I thought the question was why would you want to out the loan to keep your employees at home. I thought the benefits for the business was that it was all forgiven if 3/4 was used for payroll.

That is what they state, but they are a bit unclear on it

The benefit is the extra money in the business owners pocket correct, the other 1/4? Or does that have to be paid back?

We have heard both.  Whatever isnt' spent on paying employees is rolled into a loan (where the terms varies) or then some places said it was a loan that was forgiven, then other places said it just became a gov't backed grant (same thing really)

Isnt part of the idea is that you can keep your employees insured as well? Obviously if it makes more sense to get UE plus the extra $600 then that would be the better option for the employee.

Yes, provided that they actually pay that.  So far, I don't anyone that filed for UE that has actually gotten a check for it.  Some people have applied and submitted their online claims for 3 weeks now and not gotten anything.  Plus, I don't know if the $600 is for sure.  Or if it is prorated based on their previous salary amounts.  Like waitresses and people who make $5 per hour plus tips and they never really claim all their tips, the $600 + $274 UE would be $874 which would be a lot more than they were making while working.  There is nothing saying how it is prorated or even if it is.   Nor is there anything about people you have working at a 1099.  

I was at the grocery store and I overheard one of the employees saying how the one time in his life he could make more sitting at home is the only time he has a job that wont lay him off, lol.

That's what I was getting at above.  It seems like the gov't wants you to take responsibility for your employees so they stay with you when you open back up, but there are no safe guards in place to ensure this.  Nor has any additional info addressing this been found by us.

They haven't exactly put all the info out there yet in my opinion.  Just as an example, there is a little deli on the beach that I order from sometimes.  He has a total of 8 employees to cover the opening hours each week.  (this is a walk up to-go spot, so there is no dining and therefore no tips for servers).  He is open 10am to 6pm, with 1 hr prior to opening for prep and 1 hr after closing for cleaning.  That is 10 hours a day, 7 days a week, for a total of 70 hours.  His employees average 20 hours a week at $15 an hour.  That is $2400 per week for payroll.  By the guideline listed above as the PPP is supposed to be determined at 2.5x your monthly payroll and 75% of the amount should be used towards employees, he would qualify for $60,000 under the PPP and $45,000.00 of that would be set aside for paying his employees slightly less than they would have been making each week anyway.  That only leaves him $15,000 to pay other things like utilities, inventory costs and resupply (as he has given away most of his inventory now as fresh food spoils quickly), his beverage license, rent, liability insurance, etc...     His rent is $14,000 a month.  His rent to cover those 10 weeks that the PPP is established towards would be $35,000.

So he could get the PPP loan, pay his employees, use the 25% left over towards his rent and after 10 weeks, still be $26,250.00 in the hole with rent alone (not counting monthly utilities and licenses).  And then what?  There is no promise that anyone is going to be open in 10 weeks.  People are now saying late July.  So what does he do?  Hope another PPP loan comes through and put him further in the hole?

Or... he could not get the PPP loan, let UE pay his employees as it is supposed to do, and wait for things to reopen?