Finimpact

Frequently Asked Questions (FAQ)

Are There Viable Alternatives to the PPP?
The PPP program is now over. Pandemic Employment Assistance and the Employee Payroll Tax Retention program. Online lenders provide a variety of term loans, business lines of credit, invoice factoring, and even SBA (7)(a) processing. There was also a huge number of grant programs available to the PPP at the time, which were not taken up by as many business owners as was potentially possible.
Can’t I Just Use an Online PPP Loan Calculator?
Yes, there are many online PPP calculators. But they do not really cut down on the time to calculate payroll all that much. You simply need to calculate your total net wages of employees (or profit) for the self-employed with no employees, divide by 12, and multiply by 2.5. It is actually an easy calculation once you have the yearly totals. You still need to calculate these figures yourself with the right forms or using the right payroll platform.
What Are the Essential Requirements for the PPP?
In essence, you need to have a need for the PPP. Aside from this, the most important point is that you spend at least 60% on the payroll. The other 40% must be spent on rent, mortgage, utilities, and the like. To accurately keep track of all of these funds, it is best to have high-quality payroll and or/accounting software. All of your records will be stored online for easy retrieval. In this way, you can show the documents so you will qualify for loan forgiveness in the future. It’s also good to keep in mind that entrepreneurs with two businesses are having difficulty in obtaining loan forgiveness, as it can sometimes be hard to separate the finances of the two companies.
What Happens if I Applied for a Smaller PPP Amount That I Could Have?
Once the loan documents are signed off, there is nothing you can do. You could have returned the funds before May the 18th, but this option is no longer available. You will receive the funds and cannot apply for another PPP loan. What you can do is contact your lender for further details on how to return the loan. It is likely going to be far more hassle to try to return the loans in full and get another one. What you can do is get additional funding outside of the PPP to make up the shortfall.
What Are the Required Documents for Net Profit if You Are Self-Employed?
Self-employed individuals without any employees and file IRS Form 1040-C will need to calculate their payroll expenses differently. Use net profit for the business from 2019 as reported on line 31 of the Schedule C. You can use up to $100,000 of net profit, divided by 12 to get the average monthly net profit. Then multiply that number by 2.5 to get the maximum loan amount.

If you haven’t filed your 2019 taxes yet, that is OK. You will need to have them prepared though to submit your application.
How Do I Accurately Document PPP Funds?
Many people have a separate bank account for PPP funds. This is definitely a good idea, though it might be a little overkill. All you have to do is develop a system where you can account for the funds. There are many means to do this. Once you are recording and tracking your expenditure, then you will be covered. You can simply find the documents as needed once the system is in place. As usual, good payroll processing and accounting software will make your job a whole lot easier, especially when it comes to things like employee expense tracking.
Can I Still Apply for a PPP Loan?
No, the deadline for the PPP loan was the 8th of August 2020. This was after a number of PPP extensions. Which was a great move as it increased liquidity for business owners at a time when people did not understand all of the terminology associated with such programs.

About the Author

Daniel Lewis

Daniel Lewis

MBA accredited investment professional

Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance.

More about me