I’d like to simplify things for you today.
There is so. much. noise. right now about how to survive (even thrive) in the midst of this very difficult season.
“Pivot” they say.
And yes, if you are running a business, these times call for a bit of a shift. Only a very small amount of businesses haven’t been affected in some serious way by this ongoing crisis, and if you need somebody else to tell you to pivot at this point, chances are good that you are already in trouble.
I’ve already been writing to my East Tennessee clients a great deal about this dynamic, and I hope you have been finding these messages helpful. We will continue to be out in front on these matters, simply because things are constantly changing, and we are uncovering new information and new benefits (and how to receive them).
It’s all getting very complicated.
That’s why I hope you see why I’m working so hard to be in communication with you right now. We are busier than we have almost EVER been here at Tracy L. Carico, CPA, and much of it involves helping our East Tennessee clients and friends navigate this hall of mirrors.
So we do ask for your patience, as we tap our inside sources for the REAL information, wade through all of the new guidance being put out by the IRS, and dive into the CARES Act for the panoply of new credits, benefits and assistance details that were jammed into that massive bill.
So again … if you need small business help, what I’d like to simplify and break down are the five primary ways you and your East Tennessee business can get help right now. Plus a bonus…
The “bonus” method, of course, is us. We’re in your corner, as always.
So, let’s break down the five other ways you can get small business help right now:
1) YOUR Economic Relief Payment
Many business owners will not qualify for this because of income limitations, but of course, many WILL. I’ve written extensively about these in other places, but the short version … there’s not much you can do on this one, except wait. Direct deposit payments have begun, the checks will take a few more weeks to roll out, and the IRS is telling us it all should take about 5 months to get these to everybody.
Here’s the authoritative source to check on this for yourself.
2) The PPP (Paycheck Protection Plan)
Again, I’ve written much about this, but to sum up:
The Paycheck Protection Plan (PPP) is a loan given by lenders, backed by the SBA. You have to have employees to qualify for many aspects of this, but the self-employed can also qualify.
For the self-employed, it’s based on your profit and loss, if you’re a Schedule C, or the amount of the paycheck you wrote to yourself, if you’ve got an S Corp.
This can be a forgivable loan if you meet certain requirements, and use the funding properly.
Again, we have covered this extensively, and I’m trying to keep things simple right now.
We ARE hearing from some business owners that funding has begun to be disbursed, depending on your lender. But there is still much confusion, even among bankers. It pays to have a good relationship with your existing bank or funding source, as they are not required to work with non-existing customers.
If you don’t, PayPal and other non-bank lenders are beginning to roll out measures to accept applicants, but even then, it’s important that you have an existing relationship.
3) Unemployment for the Self-Employed
What seems clear is that you cannot both file for unemployment and get a PPP loan. So for the self-employed, it begs the question: Do I ask for a PPP or do I file for unemployment?
Perhaps both, but file first for the PPP?
Theoretically, that may work, but considering how long it’s taking to get PPP loans, you may not have time to do both before the programs expire.
Unemployment payments are now available for the self-employed, and there is a bonus of $600/week on top of the state payment, BUT you have to qualify under certain rules.
The states are overwhelmed and backlogged with the massive numbers of claims. They are short-staffed themselves, and trying to communicate under many shifting guidances.
Regardless, this wouldn’t be a path towards quick relief.
4) EIDL (the Economic Injury Disaster Loan)
This was an existing program the SBA has had in place for some time, but because each state has been declared to be in a disaster, this program is cracking under the pressure (as is the entire SBA).
Of the five, this is probably the slowest program to take action. The initial $10K grant seems to have shifted (see this Senator’s web page under “Amount”) to $1K per employee, up to $10K. This tracks with what we have been hearing from tax industry sources, as well.
After the initial advance, you can (theoretically) get a loan for up to $2MM, at 3.75% interest, with other generous terms. Authoritatively outlined here.
I’ve been talking with you about this, but I would like to repeat it:
Plan as if you will NOT get any funding, and adjust accordingly.
This is the time for the aforementioned PIVOT.
It’s time to reduce the noise, innovate, and execute within your business. You simply cannot expect that these government programs will ride in on a white horse and save your business.
Yes, there might be some relief that comes. It might even help you survive.
But if you really want to make it through these times, look in the mirror, and start making positive plans.
The very good news for YOU is: we’re here to help.
You actually DON’T have to do this all alone.
If you want help from experts who get it, and who have YOUR best interests in mind…
…you know where to find us.
Tracy L. Carico, CPA
I’m grateful for our chance to serve you and your business, — and we are dedicated to its success, in every season.
Feel free to forward this article to a business associate or client you know who could benefit from our assistance. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.