The Paycheck Protection Program—What We Know So Far

The Paycheck Protection Program loan or PPP loan was supposed to be the crown jewel of the CARES Act for small business owners. But two months after its rollout, things are still very murky and volatile. Unfortunately, in a rush to get the funds out to agencies and other businesses, the Small Business Administration and Treasury Department forgot to define how the loan and its forgiveness will work. As a result, business owners are struggling to take advantage of the financial relief it was intended to provide.

Forgiveness Application

As a small business owner, I have been following the developments in the Payroll Protection Program since it was introduced. Many of us have applied, many of us have received funding, but not one of us knows all the rules. I want to change that to the extent that I can. The new forgiveness application provides us with some clarity around what we can and cannot use the PPP money for. The good news is that, if you take a loan for less than $2,000,000, the federal government is not going to come after you to prove you could have covered your expenses with other financial resources. The safe harbor essentially says that you needed the money if you took less than $2M, so most small business owners don’t have to worry about loan forgiveness anymore—something that was very unclear amidst the tussle between Congress and the IRS.

How to Take Advantage of the PPP

There are also a handful of other measures you can take to keep more of what you make while still following the Payroll Protection Program guidelines. One option is to put a spouse or family member on payroll and put their salary into their 401k. If you were having a really good year, another option is to set up a Defined Benefit Plan. One more way you can take advantage of the PPP is by leveraging your Home Office Deductions. From your home athletic facility to your pool, there is a lot more to write off than you might think. And in these trying times, every bit counts. With more clarity around the PPP and its guidelines, you can start to use the loan more strategically to build momentum.

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