 Hi, good afternoon everybody time Stuart here got my partner Liz Trotter. Hey Liz and an awesome super special That we have Megan likes CPA, I didn't know you were CPA. That's awesome. I'm not surprised at all Megan is an authoritative voice on all things related to accounting, but specifically She knows more than anybody that I know about SBA lending programs and all the stuff going on with idle and PPP and The things that we talk about pretty much on a daily basis on this Facebook live So a lot of times questions come up and we're kind of speculating and saying well I'm not sure but I think and we look it up and it says well Even the experts don't know for sure, but this is what they're guessing. They're waiting for more guidance, but We got that we got we got the best in the freshest information there today So with that being said welcome Megan. Thank you for joining us today. Awesome. Thanks Tom and Liz I just feel so honored to be like in between the two of you here And I can't believe you guys are doing this every day Kudos to you. That is amazing to be able to keep up the fresh content. I know that it seems to just change Constantly Tom and I were chatting before we got on live how I would go into a meeting And I would be paranoid coming out like what did I miss what caught on fire? You know the sky like and I literally felt like I have my hands on my desk I'm like damage report. What's happening? It's just a little bit now I feel like it's much more like stealth attacks while I'm sleeping You know like they just drop these bombs kind of like last Friday when And if I'm gonna call it in the middle of the night because I'm in California So we're gonna say Western time in the middle of the night They just like snuck in this application form for loan forgiveness You know It's the application form that I've been the puppy waiting by the door for weeks waiting for it to come out like Give me a sign any sign. What's happening? What can I do? What can I not do? So, yeah, we got an application form. It's kind of exciting Also, it fell short of what I was hoping for I was really looking forward to it having all the answers But I've been craving and I feel like Tom and Liz I've been that that trusted advisor who's been like well I don't know. Well, I don't know and it's a CPA who's kind of an over know it all That's really hard to have to say a hundred times a day or a thousand times a day, you know, like, well Can you check back with me tomorrow? I might know tomorrow Isn't the real answer And I've had some clients that have gotten really sassy like well, I'll just go to my attorney clearly He knows more than you and I'm like, okay. Good luck And then I have like some friends because you know, I don't know you guys are like this, right? like I live and breathe small business like that is that is that is like That's my hobby. That's my livelihood. That's my family. That's my friend circle That's like everything. Yeah, I gave it because we're drowning, right? We're drowning. It sucks we're fighting and it sucks and it's hard and so many people have said like, oh, do you know through you I was able to teach my CPA all these cool things like You know that because of you I know this much more than my CPA and I'm like, well cut your CPA break I because it's my first time on your issue I'm just gonna start with this little preface that when this hit I was tired when this hit It was March 15th that deadline went by as if nothing had ever happened that deadline went by as if the sky was not falling And people were not dying and the economy was not Doing anything weird it just passed right and I was already working 80 90 hours a week when March 15th hip Then this storm I'm in California really started brewing that week the week of March 15th We started shutting down city by city county by county and eventually statewide And I was tired and I was tired because I was busy in tax season like the most taxing part of my entire year And it was just so exhausting like so exhausting And so be nice to your CPA like it's not their fault But they couldn't keep up with it like the information changed a thousand times a day and they were already tired And they were trying to juggle April 15th deadline stuff that was not extended until very late in the game And now we're still tired because our tax season will never end. I'm still in tax season I am never done. I'm in my home office surrounded by tax returns still and We're learning all of this guidance and we're trying to help organize as best as we can So I've been telling people every time I do one of these like be kind to your accountant be kind to your banker It's okay if you're learning together like this is all new payroll protection program loan was not a word until March 16th Like we've never heard of a payroll protection program loan and in Mark Rubio He was the person that championed this through and he is championing again this week And I feel like I hope someday I get the chance to shake that man's hand because it's it's it's a gift to small Business, it's also been a curse for accountants and bankers and advisors like Tom and Liz. I am sure It's it's exhausting. It's just so exhausting And You're not the only one that's exhausted everybody out there and this just all of this chaos and all of the confusion and the Not knowing is exhausting wasting all this mental energy just of calories burned Understanding a set of rules that are written Only to wake up the next morning and find the web page is completely gone. It's completely changed a whole new set of rules It's like I'm starting all over again like that department of labor like Frequently asked questions and then the Treasury frequently asked questions and they like they haven't even bothered to change out the PDF You are all anymore. They just change it like so Or I've had to print it because I'm like I'm relying on written advice From the people that write the advice that is changing while I'm sleeping like and then it's not like they're redlining what they change You have to like right wait. I this is what I thought Yes, last week it was on Friday Question 46 was like this guidance Million dollar So we're talking about payroll protection program loan There's a lot of stress about small business owners who are like should I give the money back? You know, I was really worried about what happened with Ruth Chris and Shake Shack and how do we how do we interpret like access to other Means access to other capital and every I mean every small business owner I had worked so hard to help get a PPT was then like I want to give it back. I'm like Hell no Really hard to give it back and they're like well, I don't want to go to jail and I was like well, of course. I don't want you to go to jail like Writing back back when I had a real job. I had a manager who Had this term he called it strategic ambiguity And like we were putting proposals together It's like make sure you word it in a way that if it goes bad you can claim that really wasn't what you meant You can say something different And a lot of the rules the guidance that's coming out. It's like they're not really giving us Any exact answers because you get a feeling that they don't want to back themselves on the corner Well, and I was really pissed because I feel like that's what they did with the shake shacks and the Ruth Chris's I feel like and I know that this is controversial to say but you know I'm just going to be me and say it like I feel like they had every right to get those loans that they had followed Every rule they filled out those forms exactly the way they were written They they took the advice they had they leveraged the relationships with their banks as they should And they got that money and I'm not going to fault them for it. I I don't You know, it was allowed and they did it, right? I agree. I agree with you a hundred percent They got I mean they got stockholders and There's no guarantee that any of those businesses are going to survive at the end of the day And the money that they gave back could be the difference between them surviving and not And they're an employer of thousands of people who need jobs, right? Like when I read the family's first act Oh my god. I I cried inside. I was like this is going to be so bad. So horrible. Yeah And then it turned out it wasn't that bad It wasn't it really isn't that bad the family's first act is actually kind of brilliant It's like if your staff are sick, don't let them come to work so that they get everybody else sick And then you've got a business pay them and we'll give you the money back in a week or in a month or in a quarter, right? We're giving it back For my semi-weekly employers they get it back in a week six days. They get that money back So worst case scenario, you're floating it for three months but now you've got the payroll protection program loan or hopefully you've gotten an idle loan or something and um Yeah, so that that was like I saw this train coming because that passed march 17th or 19th I get those two one of those mid-march. Oh, hi puppy. Uh, that passed march 19th Who is that? I'm sorry. Leslie was asking where molly was Molly is Tom's on that new puppy on saturday I'm sorry Yeah, so you know puppies puppies always take the line Let's see her again, please. I wasn't flipping it. This is molly molly Oh Why So a good dolly miss molly. Aw and so she's your quarantine puppy. She is she's my wing dog Wing dog. I love it So she's so sweet So sweet and cuddly. She went to the vet today and got a shot. I think she's a little sleepy Aw Okay, she sleeps during the day and she winds and barks all night. So I feel like that's a payback for your neighbor with their barking dog Tom Yeah, they uh, they adopt coon dogs and They're very vocal I do these facebook's by black porch sometime and it's kind of hit and miss because a lot of time I digress Megan. I'm sorry. We interrupted please go ahead I don't even remember where it was. I was complaining about something. I'm sure but talking about um, what came out on march either 17th or 19th, you're not sure the family's first train wreck that was like barreling towards every small business owner and and like I like to say that that to me was that like Empatis for 22 million job lost jobs 22 million lost jobs between march 17th or 19th. Don't remember which and april 1st when it came in effect And um, and then it turned out it wasn't that bad like it's a hundred percent refundable payroll tax credit That applies to non like I consult with a lot of nonprofits that applies to nonprofits and for profits small business big business It wasn't nearly as devastating as we thought it was going to be but this legislation was coming out so fast And it was changing so fast. It was so scary Um, yeah, and then we've had a lot of problems since then right now. I think we're at 36.5 million unemployed people Uh, california we're saying 70 percent of people who make less than 40 000 a year have lost their jobs 70 70 like I can't even I can't even fathom that number. That's just baffling to me But we are going to make it through and states are opening back up and People are hiring. I mean, I don't know a single business owner that's not hiring right now Mostly because of the ppp in the head count But you know, I don't know a single business owner that does not have a job with sting out right now Are you guys hiring? Oh, yeah. Yes trying After is better, right At the first side of it is if somebody is getting their unemployment with the federal bonus on top of it You know, they're gonna be applying for jobs But it's got to be a really attractive job for them to walk away for the unemployment benefit they're currently getting Yeah, so that's all another little bummer. I tend to be a little doom and gloom I try and be cheery while I present the doom and gloom, but have you guys seen the heroes act yet? Yeah Yeah, just saw that but that one's there What I heard is the chances of that actually passing the senate are extremely slim Yeah, I'm trying not to not to get freaked out over that but it's a preview. Basically. It's a negotiation. So You know some some of that will become law. We just don't know why eventually well, and it's huge, right? I mean, they it's huge. They made it really really big Um, so there's a lot of stuff buried in there But I I'm watching very carefully like July 25th is like a little heart on my calendar because that's the day that this federal unemployment kicker turns off, right? So July 26th I should have my pick up 36.5 million unemployed people and I should get the best of them, right? And so when the heroes act came through and it was like, oh, we're going to extend their opinion. I was like No, no, no. I have a job. I have I have lots of jobs. I have like They don't need it. Don't extend it. Um, so it will be interesting. I think those grumblings and murmurings are always like a little Nerve-wracking, uh, I'm really enjoying the mumblings and murmurings that I'm hearing this week in congress mark Rubio I said, you know paycheck protection program loan champion is talking about extending the eight-week window And I know for businesses that have been closed or completely shut down What a relief that would be what an amazing like life But for those of us that you know started our eight week and like Just started pouring funds out and paying all this money to find out that they're extending it another eight weeks is like Seriously, you couldn't have told us before so that we could have made You could have made I could have made better choice I would have made different choices that could have been better for my company if I'd known 16 weeks just like I mean, I feel like I lost a little bit of traction because I got kind of quiet the past couple of weeks I've been really waiting on this guidance because the way I read the ppp was there the doors were wide open for planning like It was ripe for loopholes. You could just Yeah, it's been a trillion different things and what I said was just hold off like chill out Let's let's ride this out. Let's see how it goes. And so Liz I'm sorry if you weren't able to totally write it out I think it's still good news because I hope that what you noticed by pouring out that money What we noticed with my husband's business and I I feel like if you don't know me We own a window cleaning company And so what we noticed there was how much cash we've accumulated since we got the ppp because yeah 40% of my expenses are not my expenses right now And so our motivation very early was we are going to make as much money as we can over the next eight weeks because That's free money like that's ours to reinvest in the business or to extend further. So I still think it's real. It is good. I'm not. Yeah, don't get me wrong like it's it's uh Like first world problem whining, right? It's like gosh, I'm only getting this much free money instead of this much, you know All this time trying to figure out what the rules are building strategies around it And part of it is trying to anticipate How the rules are going to change because they are going to change we had Joe Walsh on yesterday who Is is really active in the state of Maine and he's talked to like Susan Collins office And she's one of the centers that co-sponsored You know the the the bill with rubio and He has it on good word that you know, they're going to be able to take it from eight weeks to 16 week window And it's like we're going to get more money and he goes well, they're talking about that so At the end of the day, they want us to hire people and they want us to keep people working and And We're going to keep getting help and and that's that's a really important thing to remember tom Like that's a really important thing to say and that's what I've said it every time I've talked about the ppp is the intention of this program was to pay people And if you've paid people you are doing the right thing and if you've paid them generously Good for you, right? It's okay as long as that's the intention and I had so many business owners who were like Trying to get their hand in that pot like how do I how do I get the most out of this? How do I like hire my family and I was like you were missing the whole point of this program The point of this program is to help your business stay more viable And when your business stays viable and you employ people that make you money That's when you get your part back, right? That's when this all works out full circles So the idea of like, you know Motivating incentivizing attracting retaining staff for your company to make money In your company that will in turn help the owners It's you know, I I really had a hard time in the beginning when people are so short-sighted about like Well, I'm gonna you know and I so many people There's this like condition that seems pretty clear in this application that we got last week They're capping and they're capping all salaries at 100,000 and they're prioritying that for the eight week period So really the most you're going to be able to take out of this and if you're self-employed sole proprietor This is not true for you, but for everybody else you're looking at about 15,500 bucks Now there's a couple of workarounds that I've been kicking around and playing with especially for my really like High earner clients who do really well when they're self-employed But for the most part like that's about as much as you can as you can do Um, I'm I'm in the modern cleaning Page and Lisa's celebrating that she just hired a full-timer today. So congratulations. Lisa. We're in different pages. Yeah Also, Stephanie called me out because technically I'm on vacation this week, but tom asked really nice And so here I am on my vacation day, but Stephanie said I can't believe this is megan taking this week off Because she saw me on facebook live this morning before I was But you've already admitted that this is kind of your hobby you enjoy this anyway. So Vacation this is what My garden this morning and I like tried to get the schmutz off my shirt before I got on the live and you know and my Yeah, my my vacation week is to you know, help my window cleaning business because we've uh We've hired and and we've like revamped our whole training program and our onboarding sequence And we're going through a lot of hr stuff right now like setting up for bamboo hr and Getting a lot of this onboarding stuff automated and streamlined. So I'm practicing to preach in my cleaning business Which is we've been cleaning house and using this time and using this money to fix some administrative Quarks that we we're getting lazy about fixing because we didn't have to but now we should so we are And that's what we've been recommending right stay busy Everybody keep moving your your business forward now's a perfect time for training and and solidifying your systems and so many great opportunities right now that you know not good, but If it hadn't been for the pandemic, we would not have all of these Opportunities that we're having. Oh looks like we have a question here Ginger wants to know did she hear that owner salary isn't included I think she's talking about the 1923 per week dollar amount So I think ginger depends on how your business is organized. So if you're a sole proprietor or if you have a partnership Then it's not included It's it's completely dependent on your 2019 numbers, which I've heard murmurings that they are renegotiating Which I hate I hate it when they change the rules And I think I ended up on a tangent, but that's what I was complaining about like Shake Shack and and and all that was I was my only complaint was the treasury changed the rules after they got the loan They got the loan Following all the rules and then treasury changed their mind And that's what's made me so nervous about this program is they're rolling it out so fast And they're making all these decisions and all this legislation that has never existed before an entire infrastructure around it And you know, they went so sba wrote 14 years worth of loans in 14 days Same to me, right? And the volume of money that they pushed through when this program started when they pushed it down to the lenders There were like less than a thousand sba approved lenders on that list by the end of the first round There were almost 5,000 sba improved approved lenders and the way I describe it as a giant game of telephone You've got like treasury whispering to the sba who's whispering to the lender who's whispering To all of the thousands of employees like think of america said that's good That's good And then you have that lender who's one of 8,000 whispering to a business owner Who then goes you know and calls their other business out their friend and is whispering to them and it was just It was horrific. It was so stressful And it's gonna happen again. It's gonna happen again here next month and and just within two weeks, right? We have to hear within two weeks here So We've got a big chunk coming Yeah, the two week window you're referring to like the first people got their ppp monies on april 7th I believe Well, I mean the program launched april 3rd and I think some people had it as early as the 6th Yeah, it's just seven and part of this legislation that we're talking about extending the time They want to get that in place before The first people's window expired. I'm assuming. I mean make sense to me So We call this facebook live smart business moves and contractually. I'm obligated to use the word Unprecedented at least once every day alive So there lives we can go ahead and check that off our list And a lot of what we're talking about is this is truly unprecedented It's we've never seen this before and you get in the context of the amount of sba loans the context of The people filing unemployment claims Um, it's just the numbers are 10x greater plus and so many different directions and we've ever seen before so You know buckle up and we've got a lot of exciting stuff ahead and Megan ginger is asking about um being an escort So If the nascorp my understanding is she's limited to that 15,500 number And she is included there because she would be an employee. She'd be getting like a w2 Yeah, your distributions do not count. So if your nascorp who's in the habit of taking very low wages Stop it. That's very bad. It opens you up to a lot of audit This is your warning sign in bells and whistles because it hurt you on your ppp application the fact that you were taking low wages But now you can fix it because you can increase your wages I've heard murmurings. I've I don't think I've actually read it that they're really wanting you to not give pay increases of more than 25 So I'm recommending even though I don't have any authority to recommend this that you you be careful with your pay increases Don't go more than 25. When we get clarity, then you can The way I look at this application right now is we're just going to give them a gross wage number We're not even going to break it down between bonuses and salary Pay increase or anything like that. So this application still has a ton of loopholes in it Which is why I kind of read it and then I didn't forget it, but I was like, well I'm still waiting for that guidance like I still need there's too many loopholes still in this application But ginger the way I read it now You're capped at a hundred thousand dollars divided by 52 weeks times eight weeks That is your that is your maximum wage number one thing that I thought of I well thought of it a couple weeks ago and then My high as corp Like especially the ones that really don't have employees because I so I'm a cpa who helps small businesses in california Only service businesses mostly nationwide. I'm helping home service So window cleaning and maid service and lawn care and things like that but in my practice in davis I help like accountants and attorneys and you know lobbyists and You know all sorts of other types of professional services who make a lot more than hundred thousand dollars as escorboners So one thing I was thinking of is seems to me and they're they might close this they might not But there's maybe a loophole in here related to retirement contributions So if you don't like that $15,000 cap, maybe you can contribute more to retirement as an employer contribution Now depending on what kind of retirement plan your business has Uh, we don't know, uh, you know, you're gonna be limited like you're gonna have to do the same for everybody else as you do for you Um, or maybe you have time to set up a fancy retirement type plan Maybe you have a time to set up a profit share that you can tack on to your 401k or something where you have more discretion over the employer contributions And here's why I'm recommending that And I don't know if I'm recommending that actually first. Let me start by my disclosure tom I am a cpa practicing in northern california. I am not your cpa. This is generalized advice. This is not specific advice I'm not telling you to go do this, but I'm telling you to think about it and maybe have a conversation with your cpa about it Um, so now that I got that disclaimer who has another check mark out of the way But what I'm saying is like, you know Maybe there's an opportunity here where you can you can put some money into retirement And that would make it eligible for loan forgiveness And the really cool thing cares act cares act was 900 pages The cares act is the one that actually launched the payroll protection program loan There's only one tiny component of the cares act The cares act 900 pages passed on march 27th And in the cares act, they had a ton of retirement planning strategies in there a ton Like I can't wait to get back to my little individual clients my little ladies that I've been ignoring and neglecting for the past Two or three months while I saved hundreds of small businesses because They're going to be thrilled with the cares act and the stuff that's in there some of the stuff in there Is that you can take money out of your retirement account this year penalty free regardless of how old you are Which is really great information This is a weird work around loophole that might get closed But as it stands right now I think you are capped at your 15 500 and whatever 37 dollars I don't remember the exact number but generally but maybe you can make some employer retirement contributions And maybe that would be eligible for forgiveness and then if you really need the cash Then maybe you can take that money out And worst case scenario you make that contribution and you find out that it's not treated as a grant It's not forgiven as for the ppp but I mean, it's not like it's your committing fraud or anything. You're just like gonna get that money, you know, you're gonna have to Pay more of the loan back than what you were hoping to Which that's the other thing like So the intention of this program is to pay people Not necessarily owners, but people right that is the intention is for pay people If you cannot financially Responsibly spend that money Then it becomes a short term loan at a really low interest rate Yeah It's a 1% loan And if you really want to live a debt-free life and you really want a debt-free business I absolutely have those business owners in my life or like I'm allergic to debt. I can't have any debt and I'm like Then give it back Give it give it give it back. You know, you have six months loaned deferral So you're not gonna have to make any payments for the first six months. You will be accruing interest I've heard all sorts of conflicting statements about what happens with the interest if you get forgiven or not forgiven But just give the money back then You know, well, let's see. We do have a couple of questions. Did you have something real quick tom? No, just just the whole idea of of making sure that you know, it's we're cleaning homes If we're generating revenue if customers are paying us for doing work for them You can't lose There's no way to lose just make sure that you aren't spending more of your ppp money than What, you know, it's going to salary. Just make sure those salaries are cleaning homes You can do some training and stuff like that too, but you don't want to go crazy with that You want to make sure that you're generating enough revenue Because as megan pointed out earlier, you got no cost of good. So that's 100% not 100% but Well, and you do have some costs to get sold but the majority of your costs to get sold are covered right In a relative sense, you'll never think as much money per job as you will over the eight week period that you have your ppp fund And I hope I hope that everybody who's listening has had that mind-blowing experience because for me Even though like tom says I was the sba loan whatever you want to call me I didn't click for me until that first payroll with our window cleaning company And when we ran that first payroll and we do profit first method and my husband I always like I can't make it through a single talk without talking about my husband. He's like allergic to computers He didn't graduate. Well, he did graduate high school, but fairly he didn't go to college He doesn't like numbers. He's like allergic to not money but almost And so we do his cash flow planning on a whiteboard every week and that first week when we process payroll through the ppp And we like dumped a ton into savings He was like, wait, let's just have I said hi, Megan. He's an amazing guy. He's awesome. He's been working his tail off. I mean, of course He took this like call like, you know the interview question that always says like if you could start all over again What would you do differently and jeff was like challenge accepted? We're starting all over again because We laid everybody off march 16th except for our office manager and we dropped down to an owner operator And he just rebuilt this thing like He's coming out of it so strong. It's it's fun to watch like all the things I've been like we got lazy We were profitable. We were making good money. We were fine. You know, there were a couple quirks We wanted to fix but why why mech why rock the boat? And now it's it's cool. It's really cool. I'm excited So yeah, I'm excited too Okay, let's see. We got a bunch of questions. Let's get to um, all right Susan strayer wants to know she says her ppp was funded on may 12th. What date should her first payroll happen? She pays weekly Okay, so in this application, there's a new weird thing happening So in this application, they say that you can do an alternate eight week period That starts the first day of your next pay period Now practically here's what I'm going to remind you and this is what I'm reminding everybody The person who is going to be in charge of your forgiveness Is an administrative assistant who has no idea what payroll is I'm going to say that again the person who is going to be in charge of forgiving your loan application is going to be an administrative assistant Who it has no idea what payroll is so I would not What your individual payroll is They don't know when your period is Like they've never been an employer. They've never seen a 941 Like they went through a crash course of training from their bank and their bank is completely understaffed And they're the ones that your fate of forgiveness lies in their hands. Now when I say that I say I'm doom and gloom But then there's sunshine. So the sunshine part of that is your bank does not want to Keep this loan they want it forgiven They want to get their money from the sba and they want to move on with their lives because 1% Is not a note that they want sitting on their bankroll, right? So right keeping those things in mind Just because you can doesn't mean you should so susan I would say may 12th Even though this application says maybe it's an alternate date I think it's really hard to do education at your banking institution to make sure that they understood that alternate date Like I'm hearing horror stories stories from big banks like chase So sba and treasury have made it abundantly clear that your window starts the day your loan gets funded And chasis said chasis said no It starts the day you signed your loan documents Bank of oklahoma has said no it starts the day that you signed your loan documents So you might not have even seen the money in four two weeks after that And your window I have one client and it hurts. It's a five-day lag Wow, you can't Obviously you you lost a week basically because you can't pay if you don't have the money But maybe that's why they they did this thing on the end Now the way it's written now is You can supposedly like if you're you got funded on the 12th you can pay on the 13th So that money was actually That that that debt debt was incurred before your ppp started But they're saying that now that money can be forgiven and On the opposite end You can they're going to whatever money you earned if you earned say through the 30th If the payroll isn't until the third you're still going to be able to claim that too That you don't have to adjust payroll. Yeah, so I feel like I feel like when I read this application form and I I did other reading about it um I try and go like to the intention and then I also try and think about practical purposes like I I think about that administrative assistant and and I am the girl that is volunteering at my bank to do training For the staff to help with the forgiveness process because I need the inside scoop of how this bank I have 25 Not me personally, but with my clients I took the bank where I had the most loans and I was like I would like to help you through this and I would like to help train your staff because I need to be on the inner circle of How what are your standard operating procedures? And here's the scary part your bank doesn't have standard operating procedures for this yet because They don't have treasury guidance yet. So It's unprecedented Oh, he said it twice Tom Your bank got this same application on Friday, right? So they're going to interpret it their way and sba has made it abundantly clear. This is a lender led program Which means your lender is the boss Sba, they're backing it, but your lender is whoever your lender is that's who you get to deal with? um, so I feel like I went down to rabbit hole and there was a question that maybe I missed Okay, we do have another question here No, you you said something really important though that the bank doesn't want to hold that note They want to forgive everything. So the sba will basically Give them the money back What risk is the bank taking if they? Forgive 100 of it. Does the sba ever come back and say hey, wait a minute. We don't agree with with What you just did here Absolutely, so there will be you know the lender the lend so sba Can come back to the borrower, but they're more likely to go to the lender Especially if you're alone amounts less than 2 million So that that's why your bank is going to like bank and I hate to bash on chase bank But like chase bank saying like no, we're choosing our date. It's because it's there Like their business. It's on the hook, right? So however they However, they're interpreting those rules and however they write their SOPs. That's what you're stuck with We've heard that before too that some people's bank or bankers Have said they're going to be very conservative in forgiving the funds because they're afraid that the sba won't agree with any monies that that they forgive Which is why I recommend to everybody just because you can doesn't mean you should keep it simple Stay within the intention of the program now Liz I when I read this and I remember the rabbit hole. I read this as Stick with what you were so incurred or And paid incurred paid. What's the difference? So I know a lot of accounting speak but incurred means You know, were you was it like, you know, so you have you have employees that have worked out people earned it But you haven't paid them yet, right? But you owe it, right? So most businesses especially most small businesses are cash basis taxpayers And when you're a cash basis taxpayer, all that matters is when you pay it Right on your tax return. All that matters is the date you wrote the check or you swiped your credit card That's the day you get to deduct it. It doesn't matter when it was due So it's a little bit of a loophole But when I read all of this the way I interpreted it and remember I am not your cpa I am giving generalized advice But the way I interpret it was If your cash basis taxpayer all we care about is the date you paid it Now a loophole I think they were trying to close what the incurred or paid was prepayments So prepaying rent prepaying utilities And I'm not sure if they closed those loopholes But jeff got his ppp jeff's my husband window cleaning business got his ppp funded on a wednesday or a thursday I paid payroll on friday and I used my ppp funds because On my tax return that would count it wouldn't have counted in the previous tax year It would have counted in the year that I paid the payroll. It doesn't matter when I incurred it So I took that first paycheck and that went against my ppp funds now. I'm in california least employer-friendly state probably in the entire united states and I have learned very much that you don't mess with payroll Right. We don't mess with when we pay people. We don't mess with their wages, but California has no problem with me accelerating a payday california says if I wanted to pay my staff every single day I could right. I just can't hold on to their wages under so on the tail end. I'm telling people Talk to your bank figure out when did your 56 day window start and I don't like saying eight weeks I like saying 56 days because everybody's eyes get really big. That's a totally different number than than eight weeks So talk to your bank. When did your 56 day window start? What was that date? Then go find 56 days from that date mark your calendar Okay, then I say jump ahead two days because we don't want to cut it close Like this money has to clear the bank. You can't write a check on the 56 day and get it forgiven I don't think that check has to have cash because your bank cares about cash because that's how they're able to See how everything went, right? So I'm saying 54 days from the day your period starts and See when your payroll hits around there and if you need to scoot your payroll up a couple days or even a week Do it Do it and if you have to run an off payroll payroll run an off payroll payroll I really think based on what I've read and it's possible. It's going to change 100 times between now and then So today is may 19 It's a big time so may 19 to 46 to save the time I think the day you pay out that money is the day that it counts towards forgiveness And that's my and that that makes sense with the way they wrote it too, you know They're willing their work on both sides of that that 56 days again. So I think that makes perfect sense Okay, we do have a lot of questions I have a question about pua. I don't know what pua is. I'm guessing you do though megan I have an LLC, but don't have employees yet. I'm getting pua and phil weekly claims every sunday Should I claim all my income to subtract expenses? My business needs to operate. Thank you Yeah, so I think the pua is the unemployment and maybe that's your state unemployment and I'm guessing they're also getting the federal kicker and so um, I have seen lots of strategies related to owner operators who are eligible for unemployment But we're also eligible for the ppp loan and I think you cannot commit fraud like You do not want to mess with the sba Okay, we're all on board with that So we're not going to mess with the sba the sba will literally put you in jail And I don't want any of you to go to jail. So You have to disclose everything So I think if I were on unemployment and I were using that hat and remember I am a cpa Which means we I'm a very strange person when it comes to fraud and ethics and I I'm I'm crazy like when it comes to numbers Okay, but I think If you get your ppp payment as an owner operator, that's okay. You're allowed to do it Um, but you need to disclose it and you need to disclose it to unemployment and it's important that you do that I think for a practical standpoint, it would be much easier to disclose it as a lump sum So if you took now I was worried in the beginning I said I don't want my owner operators or my sole providers to pay the owners in a lump sum I'd rather them Create behavior that looks like they get paid at the same time as their employees But if you have no employees You can pay it as a lump sum and then you need to you need to report that to your state And what it might mean is that you don't get unemployment that week But hopefully it won't affect future weeks But you have to you have to disclose it You have to be honest and it's weird because I'm not payroll when you say disclose it Disclose it to the whoever the representative is at the unemployment Awesome. Liz said, I don't know whose question was but that on sundays. They're filling out their unemployment paperwork so You would say I received this money now she asked about income and expenses and And that's not your ppp is not based on income expenses Your ppp is your schedule c from 2019 line 31 And it's that number divided by 52 times 8 that is the max that you would be allowed for forgiveness for wages to you And then you can do rent and you can do interest and you can do utilities But that wouldn't affect your unemployment So the only thing would affect your unemployment is line 31 from your 2019 schedule c and talk about Well, I'm not going to curse but It's a matter for accountants because now my my sole proprietor clients need a tax return from me Like I told everybody no tax returns. I'm busy. I'm saving all the jobs in my town and I'm you know Saving the small business world and I'm too important to do your tax return right now And I'm sorry and if you fire me I understand and I love you and I'll get back to you later And now suddenly I've got all these sole proprietors. You're like I need a schedule c like yesterday right now So I can give my ppk money. Well, I no wonder I haven't been sleeping and I'm not on vacation Stephanie. I want to be I want to be at a beach with a big drink right now So you need to you need to get one of those fancy backgrounds and fake it megan because it doesn't look like you're going there anytime soon But if you don't have a special need your 1040s aren't due until when July 15 And you're not getting charged as penalties or interest or anything if you owe money So family's first act Was bad not necessarily bad anymore people's first act Very good. People's first act is the one that says like the iris is too busy to come after you right now. So People first We're we're we're doing other things now be careful of your state. Um, I I like to say this So I have clients in Idaho and in Idaho. They're due June 15 Which means that those tax accountants they're gonna you can't do an Idaho tax return without a federal tax return So those tax accounts are either going to be extending which you can still extend till October Or they're going to be getting tax returns done by June 15. So every state is going to be slightly different Keep an eye on your state. The other thing is is Liz you called this free money And I hate using the word free But I feel like the ppp money is practically free money With the exception of state taxes So some states have said whatever is forgiven. We are going to tax in california where I live is one of those states So I've told every client like this is free money except it's going to incur this much tax on the money That's forgiven. So I just you know check with your state that feds are their own animal every states its own animal Yeah One time that even at a federal level it might be taxed has that been resolved It was resolved from the beginning. There there was no intention to tax the forgiveness now I like this is a great year to retire on a beach like I think this might this might be the retirement year for me from my accounting perspective because Okay, so not taxable on a federal level. So whatever's forgiven. You don't have to pay tax on on the federal level But here's the thing that they're negotiating and that's I mean, I have so much gray for a 34 year old very recently 34 But this is really stressing me out Uh, you're not going to be able to deduct anything that you pay with this money And that makes sense to me, right? Like no double dipping. It was free. It was free money You shouldn't deduct it But practically speaking how the heck am I going to know when I go to do your tax return next year What pot of money you use for what thing? Yeah, I've already stressed about like The the idle the economic injury disaster loan amount how we have to offset our pvp loan forgiveness by your advance amount And like my clients aren't going to remember and if you don't have good books You're not going to like money's been coming into your account and like money's going out of your account and how do we know like Oh, it's going to be a nightmare next year And I have 900 pages of tax planning strategies that came out on march 27th That i'm going to have to sort through for my for my clients. So It's it's a mess, but your immediate problem is ppp forgiveness. That is our like our current very You know unprecedented tome and very very time sensitive problem right now All right, so we do have a few more questions, but I don't want to miss out on Uh earlier might even have been off the call. You said that you have a couple of idle Loan pieces of new information that would be good to share. So I want to grab those now I'm sorry you guys about the questions. We'll get to them now. Okay. Yeah, I feel like um It's been it's a roller coaster right like how do I focus my energy and I used to talk about like profitability And good bookkeeping habits and like tax saving strategies and now all I talk about is pvp and idle That's it. That's all I talk about and it's so boring Oh and idle was really exciting like two months ago Um, especially if you were a californian because we were the first state to declare all counties as federal disaster areas So that was really fun two months ago Then it kind of chilled out and there's been all these flips so this week here's the latest and this is I'm just going to say it and I'm going to give you all the caveats and all the disclaimers, but so last week, uh the week of may 11 The sba has refused to acknowledge that this was happening, but I absolutely know that this happening They gave the economic disaster loans a new haircut And so originally the economic disaster loan was intended to be a long-term bridge loan Up to two million dollars for 30 years at 3.75 percent So the terms are still the same unlike the pvp program where the terms change three times in two days The same because the disaster loan program has been around for decades. It's it's nothing new It's been around for a long time the economic injury disaster loan part related to the advance That's new. So we've seen like, you know how remember it was a $10,000 advance And then it was like just kidding. We're gonna do 1000 for employee and The cap of 10 employees. Okay, so that drama happened then like in early april They said uh, we don't have enough money to give everybody up to two million So we're gonna just give up to 15,000 So they gave it a haircut at 15,000 that haircut lasted six days And for me, I think those were maybe my worst six days out of all of this because That's when I started like hyperventilating and realizing like, you know For the businesses that are closed a bridge loan might make a lot of sense It might be the lifesaver you need to get through that closure And then you have a long term time horizon to make the money back, right? You're this is a short-term problem and you're gonna you're gonna make the money up and you're gonna pay it off Over a really long time. It's not gonna hurt your cash flow later So when they gave you about a $15,000 haircut I started freaking out and I was like, this is it like $15,000 Who wrote this crap like $15,000 doesn't even go one day or one week in most of the small businesses I advise like that is that's nothing. That's like a sneeze. That's nothing So they fixed it and they were like, okay, just kidding. We got more funding We're gonna go back to two million. So they went back to two million They were hanging out at two million and last week now SBA has not acknowledged this if you won't find it in writing I do an SBA webinar three days a week. They refuse to acknowledge it every time it gets asked They say no, that's not true But I have I've hundreds of clients. I know that this is true SBA. Give it another haircut last week $150,000. Yeah, we've seen that We've seen that how how is that that's not written anymore. No, it's not written anymore. You all know that's true What but we all knew the 15,000 is true also and it changed. So what I'm advising Well, it well it happens see California we California they say we got screwed a little bit on the first round of ppp funding Which is turning out to be a good thing But we were way ahead on econar disaster loans because you needed that federally declared emergency Before you could apply. So californians were applying much earlier. So we tend to be a little bit earlier in this process So now Lots of people get rejection letters from economic disaster loans I'm also seeing lots of people get this $150,000 limit So what I'm saying is If you're sitting okay on cash like if you got a ppp and you're kind of able to hoard a little bit of your earnings right now And you can afford to wait I would hold off on signing that loan document And I think we're going to see something come out of washington in the next week I don't know, you know, we talked about heroes act It made it through the house unlikely to go anywhere in the senate, but it's gonna they're gonna do something And when they do something Sometimes like what happened in early april is they lift the cap again So with the economic disaster loan they say you can go back and ask for more money in the first six months I feel like they don't have the manpower to process the asks for more money So if you could afford to wait I would hold off on signing the loan document and I would just wait and see if they re-increase that limit And and maybe they won't maybe they'll say no, this is it It's really going to be 150,000 But I feel like I'm going to call uncle a little bit because they said that was 15,000 It only lasted six days and then they went back up So I if you can afford to hold off I would hold off on signing that loan And a lot of people have asked me like I got the advance Now I'm getting my loan offer. I forgot even applied for the loan I don't want the loan do I have to take it and the answer is no you don't have to take it It's okay if you took the advance and you don't want to accept the loan offer Um, I'm saying, you know, I want you to be very fiscally responsible I think I'm in good company here with tom and lis who will agree with me You know just because you get offered a loan doesn't mean you have to take it or you should take it But if you need help getting through this period This is a good opportunity to get through this period And what I like about the economic disaster loan is its interest free And payments deferred for the first 11 months, which means it's essentially 11 months of free money And with my husband's company, we were lucky to get an economic disaster loan And it was a really big number and we stored it in a super secret savings account We're absolutely not going to touch it until the pvp program is completely done and settled Because I don't want to get in trouble for double dipping or using it for the same thing And my goal is I'd love to give it all back in 11 months with a big smile on my face and a much better business Um, and that's my plan for and it's going to help me breathe easier through whatever uncertainty we're headed into Um, yeah, I'm not I'm not your cpa. I'm not your wife. I'm not your like financial advisor So I want you to do it's right for you and your business But sometimes debt can be a tool and sometimes taking on debt like a bridge loan Can help give you some breathing room through a really really difficult time Most large companies to probably trading companies. I mean, it's it's it's common That they use debt as a tool doesn't mean that we use it irresponsibly But during these uncertain times It's better to have the money and not need it than need it not have it and the SBA is making it really easy for you to have that safety net that cushion Stick it away and pretend, you know forget about it, but if you need it you've you know, you have a lifeline I have to stop you you guys could just ask forever But I got to get to some of these questions or people are going to be hating on me and I don't have the answers So Megan they're on you I have to I'm sorry, but the disaster loan The only rules related to the money is it has to be used on operating expenses And so why I said hold off on the ppp is like finish your ppp program Get your forgiveness and then if you have to start drawing on it you can draw on it So that's one rule the other rule is you cannot use it to refinance debt So when I said the ppp was cheap money at 1 percent I don't know about a rule about refinancing debt with that 1 percent loan But there's absolutely rule about the 3.75 percent economic disaster loan You cannot use it to refinance existing debt So don't try it and when you read that note, which I hope you read every loan document you ever sign They have an eight year look back period and they are aggressive and they are mean So, you know, if you accept the loan follow the rules and one of the rules is you can't refinance existing debt So debt is a tool use it wisely. I'm not opposed to the program But know the rules that you're accepting and and that's too. That's really important. Okay now So that that brings me to one of the questions though is paying paying credit cards. Would that be considered refinancing debt? So Jeff my husband who's adorable was like, well, what if we just made really big credit card payments? Um, I wouldn't do it. I would use your ppp You're building. I'd keep the money really separate. Um, I would use other operating cash that you have. I wouldn't I wouldn't I wouldn't mess with it Okay, sounds good. All right. Ginger wants to know she says did she hear right? That if she has more full-time equivalents on june 30th compared to february 15th that there's no wage reductions needed Wage reduction. Why would we need to reduce reduce wages? Yeah, I don't know we don't want to reduce no no never want to do that for any reason don't be reducing wages That's going to get us in trouble the whole point Including now like don't give a raise that you can't sustain Like don't give a raise that you're gonna have to take away in eight weeks I you know, we doubled our bonus program during this eight week period But we're not giving big raises that aren't sustainable. So don't take away wages. Don't lower wages Pay your people accordingly and fairly. Yeah All right. Um, let's see So I got funded today Um, do I just check that do I need to report it? Yeah, no that one you just need to track it for right now Leslie, they don't want you turning anything in yet Um, my bank hasn't even read the forgiveness loan. Yeah, that's you're not the only one there Um regarding may 12 funding date my staff has just returned For training starting tomorrow or Thursday. So I haven't run payroll yet. I wouldn't run payroll till may 28 typically Does that sound okay? Right. I'm I'm sure I guess I mean stick with your payroll period that you have now I'm pretty sure this application says something related to that um For some of my really small businesses that are like the single member s corpse That pay monthly payroll. I was like, maybe you want to maybe you want to change that up Maybe now's a good time to change your period to more frequent. But um, yeah, I would try and stick to what you have already doing One minute Just real quick For you guys who've been asking about the training that we're doing through modern cleaning The COVID-19 class is here. A lot of people are still taking that class You know the drill on that professional house cleaning same same thing we've got Class number three that that's coming out Thursday awesome program cleaning business today If you haven't subscribed Sign up for our newsletter here. Got some new content and the super secret coronavirus Dashload our downloads link that gives you all the goodies that we talk about My smart business moves every day is on this link. So there you go and We're right out of our lives All right Dominique who says lives ask my questions. All right. So I'm going to ask this one So Dominique he received his ppp, but he was denied his idol. They said he didn't show he was impacted Should he dispute it? Um, and if so then what should he say to make sure that he gets it But also on top of that Our understanding is that they're only accepting agricultural applications for the idol now So I have two comments about that and I'll be quick. Um, so one is if you were denied and it said Economic injury unsubstantiated or something like that on that letter There's a place where you can contest it and I absolutely think you should contest it And I think you should keep it simple. Uh, there's like a fax number or mail number and email All right, I'm an email person. I would start with an email I would write a very generic plain English email that's no more than like five lines that says I am experiencing economic injury Here is my year-to-date number from last year and my year-to-date number for this year I'd even do the math for him. I am down this percentage I would say attach. Please find last year's tax return Last year's year-to-date p&l compared to this year's year-to-date p&l. Hopefully have quick books with the percentage difference Um, thank you for your consideration. Please let me know if you have any questions Um, I appreciate your help during these unprecedented and trying times That that's what I would say don't me And then your second question about agricultural loans as my understanding is that it's only related to new loans And my sba people who refuse to acknowledge the fact that these are being capped in 150,000 Are saying that they're going to reopen the economic injury disaster loan program soon So they're going to reopen it to everybody now take that with a grain of salt I haven't read it anywhere. I've only heard it, but it was a reputable source and um Probably just good because some people Were left out of the loop and some people were really upset. They're like, but I didn't apply yet It's bad Like I think if they intend to reopen it and they don't get more funding from congress Then we won't see the hundred and fifty thousand dollar cap lifted If they do get more funding We'll see the lot the cap get lifted again and hopefully we'll see it reopen But if you got funds, but got capped say at the hundred and fifty and they fund it Can you go back and ask for more? They say that you can I have no idea how that works When you get that email that says, you know, your loan has been approved It says you have to log in in the system within 30 days. So do that Don't wait more than 30 days. I'm talking like one to two weeks probably Then once you log in and you look at your actual loan documents It says you have 60 days to accept the terms of the loan So I feel like you have wiggle room for them to sort out their funding And I feel like it would be easier to ask traditional funding before you accept money than it would be after But I this is all educated guesses. I actually have no basis for these assumptions. I I'm just I'm guessing but I I feel like It's practical. So Okay, so we try really hard to get off these and be respectful of everybody's time We have gone over today seven minutes. I apologize for to everybody that We out try so hard to I'm going to keep track of your questions here and we'll get an answer tomorrow Thank you so much Megan Information and I know Like like me everybody really appreciates having an expert come on and and tell us their interpretation because it's still so So nerve-wracking. So it's too for helpful having you come on and help everybody And I say I think Liz and Tom do a great job of this is you are not alone This is not your fault. You did not cause this you are Company and together we're going to get through this Keep fighting because you're important like your business is important and the struggles you're going through right now are important You're making a difference. Please keep it up. Please Let's Thank you so much We'll see you guys tomorrow five o'clock eastern. Take care. Be safe. Bye y'all