Thanks, Steve. Much appreciated!

If you’re using PPP money to maintain payroll, it seems like that fits the certification requirement pretty darn well.

I really want to thank you for your great posts and follow-up with everyone.

I run a small investment advisory firm in NYC with two employees. I applied for and received the PPP based on the original guidelines and now I’m wondering if I should return the money.

My practice generates a mid-six figure Schedule C net income, but since I’m fairly young, I haven’t accumulated massive liquid savings. Although most of my revenue is recurring and fee based, it is highly sensitive to the stock market. So far since markets have recovered somewhat, I’m doing ok. But that could change, if markets resume their decline, which is far from impossible given current uncertainty. A protracted depressionary bear market, while not a base case scenario, would wipe out my liquid assets, since my fixed costs are high, unless I reduce headcount/office space.

Before PPP I was seriously considering reducing staff/cutting salaries, in order to defensively preserve cash. PPP seemed like a real lifeline that gave me a chance to pause and with those thoughts. By now I don’t know if I should keep the money. The new rules are so vague that it is not clear to me. What are your thoughts?

Good points. And not trying to be argumentative, but both parties have their fingerprints all over this one and IMHO share responsibility for the sloptastic job they did.

P.S. I’d actually be okay with Congress saying, “Well, yeah, it wasn’t perfect. Sure. We wasted a lot of money. But the point was, we wanted to shower small businesses with money. Do whatever it takes to help that part of the economy.”

The whole thing points out the pitfalls of taking money from what will no doubt become a highly controversial program that will invariably come under heightened scrutiny after the fact, particularly if the Democrats take over in November.

I serve on the governing board of a faith organization that has received bank approval for a decent-sized PPP loan in the second batch of SBA funding. The rationale for applying was to treat the loan as backup liquidity in case monthly tithes fall precipitously during the pandemic. The initial reading by most of my board colleagues was that this was “free money” and that we’d be “stupid not to take it.” I was never impressed by the case being made that we “might” need the money, and fearful of the lax standard we were using in making the need certification.

The revisions to the guidance make it pretty clear that we need to have a strong case that layoffs had better be a fait accompli if we don’t take down the funds.

The morals of the story:

1. Just because you think you “can” take free money does not mean you should.

2. There are undoubtedly businesses in greater need than ours, and a faith organization has a moral imperative to act sacrificially when such is true.

3. There is no telling what kind of small print will be in the loan documents that subject us to the risk of a government audit which may occur in a politically charged environment.

4. Faith organizations may be very out-of-favor in the next Administration, which may populate the next Justice Department with leadership seeking to punish us.

5. Better to pass the plate and let others have this money, particularly if we cannot build an ironclad case that this loan WILL, in retrospect, in 20/20 hindsight, have been absolutely necessary.

I don’t know what to tell you. Your situation absolutely doesn’t seem like Shake Shack. (Gosh, will that be how we think of them now? The people who didn’t need a PPP loan?)

If you don’t need the money to cover people’s payroll (including the owners’ payroll), yeah, you should really leave it for someone who does. But then again, it’s hard because of all the “what ifs”…

P.S. We didn’t take a PPP loan. Oh sure, I could conjure up really negative scenarios where everything goes bad… But we’re a tax firm. People still need to pay their taxes. And this thing will solve itself in not too many months (even if at great cost)…

If you’re a sole proprietor, you can pay yourself each week as owner lesser of 8/52nds of 2019 Schedule C or $1923… and this counts as $15,384 of payroll.

This level of payroll also lets you get up to $5128 of forgiveness for rent, utilities and interest as long as you’re not now considered self-employed. I’m not sure I know what “self-employed” means. But it seems like it means a Schedule C business without employees.

This leads me to last comment: Maybe you need to hire a new employee. You’ll probably get money for this from the PPP loan. You’ll possibly also qualify for some rent, utilities and interest spending forgiveness.

BTW, one other thing to be sure you understand. You need to make a written offer to rehire your guys at same wage rate so their departure doesn’t cause a headcount reduction.

P.S. You might want to carefully read through the Gotchas again… especially about reductions in employee headcounts, impacts of rehiring people, the 25% rule, and then the self-employed business owner rule. (Sorry.)

I still have machine and equipment lease payments to make on a monthly basis with less than $10k in the company savings and our receivables are at essentially zero.

My loan amount was $26k. I pay myself through owner draws typically. Using the 8/52 rule I could pay myself about $12k. Does that count toward the payroll piece? What about using this loan to pay for two months worth of my equipment leases?

The kicker for me is that both of my guys just accepted jobs with another company prior to my getting funding. My business is essentially dead in the water with no upcoming work and no employees to do anything that eventually does come in. Your thoughts?

I’m a super small S-corp — around $300K in revenue. My husband and I are part owners 50/50 and take a smallish but reasonable salary. Then we have 3 employees who are categorized as part-time on our payroll but do rely on their salaries for nearly 100% of their income. (They were freelance but because of CA law they were switched to employees in January.)

We are an internet based company working in marketing and I applied for the loan because I was worried about the economic uncertainty and if companies would be paying for marketing at this time. So far we haven’t seen much of a dip BUT I’m not sure what the next few months would bring and it would break my heart to not support my employees.

We were JUST approved for the loan last night and it’s sitting in my inbox waiting to be signed but I don’t want to get in a heep of trouble taking the money.

Couple questions:

— My employees are hourly so their income fluxuates. Am I okay as long as they don’t dip below the numbers I submitted for loan approval?

— So far my company hasn’t NEEDED the load. We’re no Shake Shack and don’t have millions or even hundreds of thousands in the bank but my husband and I do take profit distributions and there is no proof of economic need yet. Could we get in trouble if we take it? Or are we at risk of losing the forgiveness?

— We’re super small potatoes and the loan amount is under $40k but I also can’t weather a bunch of legal trouble… weighing if it’s worth taking the preventative measure OR even if it’s legal to?

— I guess I could not take the loan and if there is a dip and take the employment tax break thing?

Thank you so much!

Em