PPP Loan Extension
Most of the questions I’m getting about PPP loans relate to when can one apply for forgiveness. I’ve been telling everyone I don’t know, mostly because I didn’t know. The SBA hasn’t opened their portal to accept Loan Forgiveness Application Forms. But last Friday announced the portal will open August 10th. That’s subject to change, based on more rule changes, but August 10th is the target currently.
More importantly, the time to apply for a PPP loan has been extended to August 8th. You may have already got your loan—didn’t everybody? –but there are some who didn’t. This is particularly true for self-employed people who file a Schedule C but don’t pay themselves a salary. This has been clarified and presents an opportunity.
Self-employed people simply take the net income from their schedule C (the bottom line) and that is considered their compensation. It is, after all, the amount they pay self-employment tax on. The PPP loan is calculated as 2019 self-employment net income divided by 12 and multiplied by 2.5. The limit is $20,833 ($100,000/12×2.5). It appears that loan forgiveness is going to be really easy, so this is free money. If you or someone you know has a small side business reporting on a Schedule C, you’ve got until August 8th to apply for your loan/grant/gift.
The Virus is Winning
It is clear now that the Coronavirus is winning, at least in the U.S. While Europe, Asian and Canada have been successful in controlling the virus, the U.S. has not. The United States actually looks like a third-world country in this regard. Americans can’t travel overseas because we are dangerous to other countries. It is an embarrassment.
And it is going to be expensive. Our country’s poor leadership and lack of patience to lock down until the virus was controlled, means that now 37 states are showing increases in infections and some are verging on an out-of-control hospital situation. Even Washington state, which had done pretty well, is going the wrong direction. Trillions of dollars were spent to try and ease the damage and we still blew it.
It is becoming clear that schools will be virtual in the fall. The football season seems likely to get cancelled. What is the holiday season going to look like? Probably really low key. Working and schooling from home will probably last well into 2021.
The economic damage will likely be severe. Those businesses who made it through the first wave need to brace for another very tough period. I haven’t understood the stock market during the last few months; it has seemed way too exuberant for the circumstances.
Will there be another stimulus package? Probably, if only because an election is looming. Concerns about deficit spending seem to be, well, of no concern any more.
Doom and gloom? To me, it is hard to see this any other way.
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