Brunch & Budget

b&b231 Free money for freelancers... but hurry! PPP loan deadline on 8/8!

July 22, 2020 Brunch & Budget
Brunch & Budget
b&b231 Free money for freelancers... but hurry! PPP loan deadline on 8/8!
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Brunch & Budget
b&b231 Free money for freelancers... but hurry! PPP loan deadline on 8/8!
Jul 22, 2020
Brunch & Budget

One more episode on PPP and EIDL loans before the PPP loan deadline passes. Take a listen!

Show Notes Transcript

One more episode on PPP and EIDL loans before the PPP loan deadline passes. Take a listen!

Dyalekt :

Just like hot chocolate and blocks thats hot in the projects justice is best served with the side of logic. This is brunch and budget in the show about personal finance and racial economic inclusion with your host, Pamela Capalad. Certified Financial Planner and Accredited Financial Counselor here to take the bite out of your budget. I'm your sound provider Dyalekt and here's your host, Pamela Capalad.

Pamela Capalad, CFP, AFC :

Thank you Mister sound provider. Hello, everybody. Hello, we are talking about free money for freelancers. Really. It's very unprecedented. The CARES Act has done a lot for freelancers, this round in terms of unemployment.

Dyalekt :

Before we do any of that. Can I just shout out because I've seen freelancers in the room. You know, we've been doing our best to support black owned businesses and one black owned businesses I saw just popped into chat. If you've seen my album cover or any of our promo photos, they were done by the amazing Ray Maxwell I just saw an amazing photographer who's one of my favorite people, just like you We know where in the world with a bit like in the world in terms of photography and shadows and doing really cool stuff with that. So you know if you need some photos done and you look into sports and black owned businesses holler that one RayMaxwell.com

Pamela Capalad, CFP, AFC :

Yeah. All right, everybody. Let's get into it. Please, please, please leave your questions as we go through this. This is a little complicated, it is gonna feel a little bit like trigonometry, but we can get through it. And what's been great about the PPP loan is you can get it and there's so much money left and lenders have figured out how to streamline this electronically. The big trouble with pbp loans in the first round was one banks were cherry picking who they were offering the loans to, and to the money ran out so fast because of it. And three, the process to do it was all paper manual handwriting was a mess. Yeah, it was a mess. But now that they've extended the program again, and they've also extended the forgiveness terms. It's actually going To be free money for a lot of freelancers for a lot of solo freelancers in particular. Um, so let's dive into it. Let's talk about the PPP loan is and then we're also going to touch on, start with EIDL . I think that's a good idea because the idea is not free money

Dyalekt :

is economic injury disaster loan if you want to know what it stands for.

Pamela Capalad, CFP, AFC :

Yes, yes. Economic injury disaster loan.

Dyalekt :

All these things have been thrown around. It's just too many letters.

Pamela Capalad, CFP, AFC :

It's too many letters too many acronyms all the freakin time. Oh, yes. Now I got the EIDL. Yes. All right. Also sad news, everybody, someone just hipped us to the fact that the EIDL loan advances are out. They ran out on Saturday, they had $20 billion allocated to those loan advances and the loan advances no longer exist, but the loans themselves do exist. And I've been seeing some stuff back and forth about what these loans were whether or not you should take them. You may have gotten an email about the loan to find out if you've qualified and things like that. It is legit came from SBA economic injury disaster loans in contrast to the PPP were actually issued directly from the Small Business Administration. The EIDL has been around for a long time, actually EIDL these are the loans that were given in natural disasters. These are the loans that are given to small businesses who lost business because of like big events that they could not have predicted and is not due to the business itself. So COVID was a big one. And this is the first time that they actually offered loan advances and also really open it up to any small business or any freelancer. So the thing about the economic injury disaster loan is they just reopened it to small businesses as of 6/15, you can get a loan of up to $150,000. The way they determine the amount is they look at the most recent tax return you filed either 2018 or 2019. So in this case, 2019 since we all filed our taxes two days ago, right, everybody, right, everybody? So the economic injury disaster loan, what they do is they look at how much money you grossed. So that's your schedule. See, that's how much money you made. They do Before deductions, so let's say you made $100,000 in 2019, then they're gonna take half of that and give you six months operating expenses. And what that means is they're gonna offer you a loan for $50,000. And this loan is truly I've never seen a loan like this before offered to a business. So one is, the loan is a 30 year loan term, most business loans are between one to five years. The other thing is that the interest rate is 3.75%. So it's as low as a mortgage. This is basically a mortgage type of loan, but for a business, so if you need the money for whatever reason, you have 30 years to pay it off. Just to give you an example, our workshop company BMV speaks received $12,000 in EIDL, and we get to pay $60 a month for 30 years. pay that back. That's not bad. That's usually a hundreds of dollars every month for a short period of time.

Dyalekt :

And to shout out to Talking about you know, taxes killing you know, that's one of the tough things about this is like, depending on your tax situation last year, this might be really advantageous for you or you might have gotten left out if it was like, if you're building a new business or if you're having like a downturn year or if it was a pivoting year, or if you're building a new project, it's Yes, yeah. Which, hey, which this happened to us too. So yeah.

Pamela Capalad, CFP, AFC :

So the thing with EIDL, you can not use it to buy a house

Dyalekt :

because he got into mortgage?

Pamela Capalad, CFP, AFC :

No, it is a mortgage like loan. The reason why it's special and fancy is because usually when you take out a mortgage, the collateral is the house, right? You're like I agree to pay this loan. And if I don't pay you can take my house in this case with the economic injury disaster loan, it's I agree to pay this loan and if I don't, then you can take any assets in my business. Now the assets in my business are laptop, on your laptop, or laptop or laptop laptops are collateral for this 30 year loan. So that's What's interesting? Yes probably your hats about the economic injury disaster and I'm glad you asked that because economic injury disaster loan what it is allowed to cover is any business operating expenses so you paying yourself whether on payroll or as a 1099 and person you paying any business debt off so consolidating any debt also any business utilities any mortgage payments, it's similar to what the PPP loan you're able to use, but the economic injury disaster loan works and supplement with the PPP loan and a lot of ways.

Dyalekt :

Hey, we're just jumping into questions yeah blazing think is asking what's the usual interest on a small business?

Pamela Capalad, CFP, AFC :

Oh my god, that is a great question. Good questions, small business loans. Usually the collateral is the business and for a lot of people, there isn't much there isn't much in terms of assets in the business. So the industry non small business loans I've seen are usually right now probably like between 10 to 15%. And usually the terms are between one year to five years at the most that I've seen for small business loans. It's also usually pretty difficult to qualify for a small business loan because They tend to check your credit. But they also want to see a profit and loss statement, they want to see a couple years tax returns, they want to see balance sheet, they want to see your personal balance sheet, the business balance sheet. So qualifying for traditional small business loan, which you would take out at a bank is very difficult, even if it's backed by the SBA. So the fact that the SBA is issuing these loans directly means that it is way easier to get it. All they do is check your credit. They don't even ask for paperwork,

Dyalekt :

if you don't even know what's going on with what she's saying with the paperwork. But you've ever heard of somebody trying to get a green card through marriage. That's how it's been described as trying to get a small business loan. And I've been there when people going through both and it's really true. It's like that it's so much stuff and there's so many technicalities so

Pamela Capalad, CFP, AFC :

much and so many reasons why they can just say no,

Dyalekt :

yeah, just right at the end, they're just like Yeah, all this stuff is great, but now another one for my invisible knapsack. I love that. I want to get one of those. Can I qualify for the ideal if I'm starting a new business this year? Also? Great question. Yes,

Pamela Capalad, CFP, AFC :

unfortunately not the economic injury disaster is only four Businesses that existed as of February 15 2020 or before

Dyalekt :

I wonder if like there is going to be anything for the people who are starting new things that

Pamela Capalad, CFP, AFC :

I know that's the thing that hasn't been acknowledged it hasn't been addressed at all right? Well, because I know that like we lost a lot of potential income because all of our gigs cancel you as an art Yes, yeah, well

Dyalekt :

workshop I had, specifically like my museum and inverse project. I had done all the like proof of concept stuff in 2019 and then booked the big gig for 2020. So yeah, you know, I was just kind of asked out on those and I want to shout out with 10 are saying about being a freelancer all the last year finally on a salary trying to start a small business here a clothing cartoon project, which sounds awesome, it's really dope. And I'm sorry that you know, all of this stuff here is not created to help these growing and starting businesses,

Pamela Capalad, CFP, AFC :

right. That's the tough part is the business did have to exist it well. It's meant to it's meant to buy boy up existing businesses. It's meant to

Dyalekt :

hold up I mean to real About it's meant to hold up the existing power structure. Yeah. And the rest of us also can claim a little bit too by, you know, being Hey, on the bottom is still part of the struct.

Pamela Capalad, CFP, AFC :

Yeah, yeah. So I mean, this is why we've been talking about this so often and why we were like, We already did a PPP episode. We've done two workshops on this with fiber. And the thing is, these are again, I have not seen laws like this or anything included in previous Acts where small businesses have been able to access loans like this and have been able to access money like this. This is usually reserved for huge corporations who also got a piece of and we'll talk about that

Dyalekt :

well, yeah, yeah. I mean, they get a big chunk of it. That's what I'm saying. But like, we actually got to get some of it to this time. Yes. Oh, epiphany. Yes. One of the biggest barriers to the EIDL is the FICO score. It has to be at least 570 I've seen people get it with a cosigner that's really good

Pamela Capalad, CFP, AFC :

to know that's really good to know. So if you are in a place your credit score is not at 570 then you may want to apply for the ideal with a cosigner and Would you have to list them on the business? I guess that's the question. Yeah, I'm not totally sure about that. But yeah, they do check your credit, you will see a ding on your credits a hard inquiry, you are applying for a loan. So you will see it show up and you will see your credit score go down. Also,

Dyalekt :

again, because we can't stop saying that the only time your credit gets dinged when you are asking for someone to look at your credit is when you were applying for a loan when you were asking for money. Yeah,

Unknown Speaker :

yeah. Oh, it looks like Fefi got some PPP money.

Pamela Capalad, CFP, AFC :

Yes, that is why we're doing this one more time because the PPP applications got extended to August 8. So you have until August 8, you need to have your 2019 taxes filed for AI do I think by now you do need to have your 2019 taxes filed. I usually am recommending that people take out these loans if they're in a place where they're uncertain about what their business situation is going to be in the next couple years. The thing about ideal is your first payment doesn't start until 12 months from the day that you take out the loan. The interest accrues, but it's not very much and you have a whole year until you actually have to start paying it back and then you get 30 years to pay it back. So the thing is, I mean, there's no prepayment penalty. So if you in a year you look at it and you start to see the loan payments, you're like, actually, I didn't need this money, you can return the full amount in a year.

Dyalekt :

Can I give some people permission, though? Because like, I think some of you are listening to what you're saying. And they're like, Okay, fine. It doesn't seem like that big of a hit. But I know me and I know where I'm at with my money and dealing with loans and stuff. And that's another thing that's too much, right? If we're saying this stuff, and it sounds like this is another thing that's too much that you can't deal with. It's okay to let it go. Yeah, the reason that Pam keeps pushing this, and then we're always saying that this is this is kind of an unprecedented opportunity in terms of loans, and to be real, all of this stuff is risky. All of what we're doing is risky, and things are even riskier. Now as the epidemic plus uprising plus the scene, changing our technology and the way things are seeing with everything none of our industries are going to do with the things that they thought they were going to do for the next 10 years. They're not. It's gonna be what it is. Yes, if you can't deal with another thing on top of that, I feel you.

Pamela Capalad, CFP, AFC :

That's totally fine. That's totally fine. I'm glad that you said that.

Dyalekt :

I just want to be, you know, I feel like there's so much pressure sometimes on these things too. Like I have to snatch every last piece of these things before it's gone.

Pamela Capalad, CFP, AFC :

Right. Right.

Dyalekt :

Do whats best for your business.

Pamela Capalad, CFP, AFC :

Do what's best for your business, do what's best for you, in the loan terms are really incredible. I know. I'll say that again, even after you said what you said, Yeah. Because if you are hesitating for whatever reason, and you know that you actually need the money to operate your business in the next year, it could be worth taking it.

Dyalekt :

Yeah, I guess the second part of that is, you know, the the risk isn't hugely outweighing the risks you're already taking by running this business.

Pamela Capalad, CFP, AFC :

Yes, exactly. Exactly.

Dyalekt :

We didn't really give folks grace around the stuff.

Pamela Capalad, CFP, AFC :

We talked about money, personalities all the time and money, personalities and crisis. We are at our extremes right now. So if you are someone who feels like you're gonna bury your head in the sand when this loan payment comes through, it might not be worth the stress to take it out. But yeah, let's see. And we got some good comments back here. Oh, let me see if someone didn't do their taxes do they qualify for PPP? Ah, no, not anymore. Yeah, you have to do 2019 taxes before August 8, it's fine. If you didn't do it past the deadline, if you file an extension or not, you can still file your taxes. As long as you do before August 8, they're requiring 2019 returns because they already do

Dyalekt :

All the regular penalties to apply, you know.

Pamela Capalad, CFP, AFC :

But yeah, and you gotta risk it to gain. I mean, that's true to.

Dyalekt :

Yeah, right. I mean, that's we're saying that's part of this whole thing.

Pamela Capalad, CFP, AFC :

Yeah, that's part of it. But basically, the EIDL can be used for business operating costs. brunch and budget also got the EIDL loan, and we got $146,000. We did all right. And we're going to be using it to cover payroll cost this year. And next year, too, just to make sure that we have all of that in there, you know, covering payroll costs covering operating costs. Let's start talking about PPP because the thing about PPP is, while it is backed by the Small Business Administration, it's backed by the SBA, individual banks and lenders are the ones who are issuing the loans. So on top of what the SBA requirements are banks can make up whatever other requirements they have.

Dyalekt :

I think it was what was it, PayPal?

Pamela Capalad, CFP, AFC :

PayPal was checking your credit score. They are not supposed to check your credit score for PPP and PayPal was. Yeah, yeah, you're totally right. Right. They're gonna be like, okay, PPP. Here we go. Like if it's a small local bank who you know, and you have a relationship with them. I've had some clients who they loosen some of the requirements on them because the bank was like, you know, we trust you, we know who you are all those kinds of things. And then we've had people who their bank was super strict, and even if they had everything they needed to give them more, or do you apply through PayPal? Oh, wow. Oh, wow. Oh, that's interesting.

Dyalekt :

Again everybody having their own rules and PayPal being kind of outside of the bank structure. Yeah. Allow them to just be like, we're gonna do whatever.

Pamela Capalad, CFP, AFC :

Yeah, I mean, luckily right now we're gonna go over where you can apply but a lot of online lenders are streamlining the process too and making it super easy to just do it online. And they may have looser requirements as well. One of the reasons why Banks are excited to do these loans and why a lot of banks cherry pick their big clients is because banks got paid for every single loan that they closed. So, you know, there's incentive to do that work.

Dyalekt :

Can I pull back real quick? One more EIDL question actually. Um, let's see, I see Habiba. Hello, can you use the ideal loan to pay for professional development like tuition for graphic design portfolio schoo?

Pamela Capalad, CFP, AFC :

So technically you cannot. So you can use the ideal to pay for business operating expenses, what you can do is instead of paying yourself through your regular business income, you can pay yourself through EIDL and you can pay for your other business operating expenses through the EIDL and then you can use whatever money you were going to pay yourself for the business income to pay for this graphic design portfolio school. Yeah, yeah. So it's, it's a little bit of a loophole.

Dyalekt :

Well, it's a little nebulous anyway, cuz I was like, I'm not sure if PD does or doesn't count as operating expenses. pending on your business, I mean,

Pamela Capalad, CFP, AFC :

EIDL l had some specifics and it was all about operating utilities, payroll, insurance, things like that.

Dyalekt :

Okay, so continuing education is no on the list.

Pamela Capalad, CFP, AFC :

But again, the thing about the EIDL loans is, you

Dyalekt :

know, that's a way because if you're in education or something like that, it's like it is mad essential.

Pamela Capalad, CFP, AFC :

Exactly. So yeah. But yeah, they're not paying for any continuing education for anyone. No.

Dyalekt :

And now Can I ask you I said, Can I refile? adjust my taxes? Can you give us a little more info on that? Oh, yeah. What does that for for one of the loans? I mean, like, you can, yeah.

Pamela Capalad, CFP, AFC :

I don't recommend re filing your taxes or amending your taxes, unless you really feel like there's a need to the reason why is because all amended returns get hand audited, basically. So they get reviewed by hand by an IRS agent, which means that you are more likely to potentially get audited with an amended return. So I don't recommend it unless you really have a good reason to.

Dyalekt :

Let's continue on telling folks about the PPP.

Pamela Capalad, CFP, AFC :

Let's do that. Okay.

Dyalekt :

How do I combine unemployment and my tiny $1,900 dollars PPP loan?

Pamela Capalad, CFP, AFC :

Oh, that's such a great question. Oh, okay, good. So how do you combine unemployment and PPP loan? So this is where it gets tricky. Let's talk about PPP loans and we'll talk about the relationship between PPP and unemployment because it is also very, very murky.

Dyalekt :

Yeah, you know, y'all need to wake up and get these loans.

Pamela Capalad, CFP, AFC :

Hell yeah, wake up and get these loans. So let's talk about PPP. The way PPP works is it's pretty cool. So again, the deadline to apply is August 8, you can apply if you have any Schedule C income, and just basically that means look on the tax return you just filed or the draft that you just filed, go to your schedule C form which is called profit or loss from business income, and see on line 31. If there's a positive number in there, there's a positive number in line 31 Then you're eligible for PPP loan money. And the way PPP works is as long as you are a freelancer who has Schedule C income because they expanded the forgiveness to 24 weeks, whatever you apply for as a solo Freelancer is going to get forgiven 100% of is going to get forgiven. There's a really great Forbes article that Brian Thompson wrote Brian Thompson shout out to him. He's a great CFP, and JD and he's been writing amazing Forbe articles about this whole process and with PPP for freelancers, what they finally ruled on the SBA is that 100% of that loan is going to get forgiven. So yeah, and then let's see, after that we have an employment question.

Dyalekt :

Oh, yeah, combining the unemployment and thePPP one. Okay. So yeah, I want to get that working.

Pamela Capalad, CFP, AFC :

So from what we understand one the PUA, the pandemic unemployment assistance extra $600. A week for unemployment is ending in a couple of weeks on July 31. They also expanded the time period for PPP loan forgiveness to 24 weeks and they also created a simpler forgiveness form for people like solo freelancers, so from what we understand that you're just going to probably have to apply for that easier form. And if you wait out the 24 weeks, then you're just going to get the money forgiven anyway, regardless of whether or not you are unemployment. So to answer your question, we think and I say this with the caveat, because we don't know there's no guidance from SBA or any federal unemployment pandemic assistance, anything about how those two work together what we understand based on the rules as they stand now, you can continue to collect unemployment until the 31st. And as long as you make sure you apply for loan forgiveness as a solo Freelancer with a Schedule C by the end of those 24 weeks, then that full amount should get forgiven. whatever amount doesn't get forgiven if for whatever reason you're not in the situation. We are solo freelancer, the loan terms are 1% over five years, so you can get part of it forgiven. It's not all or nothing. It's only part of it qualifies for forgiveness, then the loan terms are really, really, really great 1% interest over five years, you can just pay back in that time or you can pay back right away.

Dyalekt :

Wait, we got another question I want to answer. My father has a small business and applied for a PPP loan but was denied. Should we apply again?

Pamela Capalad, CFP, AFC :

Oh, I believe that you can apply again, I would apply to a different bank. I don't know if you know why he was denied. Again, a lot of banks, especially in the beginning made up really strict rules around how they were going to qualify people because technically the bank even though the SBA is backing it, technically the bank is signing off and saying this person is an eligible lender. So depending on the bank, and we actually do have a report we'll talk about in a second, of course, there discrimination for PPP loans. The PPP loan program was actually supposed to be, in the second round minority business owners were supposed to be prioritized. The SBA forgot they say the SBA did not give any guidance to banks that did not trickle down that Minority Business were supposed to be prioritized, but there's a lot of different options for where to apply now so your dad might be able to reapply online somewhere.

Dyalekt :

Oh, and Got some math? Let's do it. So if I got 26 k on my C form, what's the estimate of my loan? All right.

Pamela Capalad, CFP, AFC :

All right, I'm pulling out the calculator. Everybody do this, look up your schedule C. So let's start 10 or 26. k, what you do is you divide that by 12. Right? And it is 2166. Which is your average monthly income six repeating Yes, yeah. 2166. And then you multiply it by 2.5. Because you're allowed to borrow up to two and a half times your monthly average monthly income. So your loan amount will be around $5,416.

Dyalekt :

Again, to tell you the math, that is dividing it by 12, and then multiplying it by 2.5.

Pamela Capalad, CFP, AFC :

Yes, right.

Dyalekt :

Yeah about five grand. We'll circle back to the place and pick one. That's a great one. But does banking with a credit union make a difference? It's really important.

Pamela Capalad, CFP, AFC :

That is a great question. So banking with a credit union, one, they have to be an SBA approved lender. So not all banks are SBA prove lenders, you have to make sure that's the case first, right? And then it can make a difference. We've had clients who had relationships with smaller banks who were able to qualify for the PPP loan because their banks knew them.

Dyalekt :

Yeah, really like, well, then think about these credit unions is like, you don't necessarily have to have a loan out with them for them to be like, Oh, you're a valued customer. We want to help you. Well, yeah, a lot of these banks are like, we don't know your number.

Pamela Capalad, CFP, AFC :

Yeah, exactly. So I actually got my PPP loan through a credit union, and I wasn't even an existing customer. So I was a new customer to Brooklyn, co-op credit union, and they were issuing PPP loans. They are prioritizing businesses in Brooklyn, and they're prioritizing loan sizes below $250,000 to make sure they were actually giving money to small businesses. And so credit unions often make a difference as long as they're approved SBA lenders so that's the big trick is we have to be approved by the

Dyalekt :

SBA. Let's get back to blazing but you know, But 100% will be forgiving even if I'm on unemployment insurance.

Pamela Capalad, CFP, AFC :

So we think the answer is yes. We think the answer is yes. But we are not sure. As far as we know, the rules state that that's the case.

Dyalekt :

Yeah, yeah. Yeah. You have to do your little bit of googling.

Pamela Capalad, CFP, AFC :

Oh, yes. Yeah. There's actually if you google approved SBA lenders, I think sba.gov has all of the approved SBA lenders on their website. Also, if a if a credit union or a bank is still taking PPP loans, it's probably right on their website in terms of being able to apply Yeah, all right. And then Oh, we got another question.

Dyalekt :

Oh, here we go. If I made negative money on my schedule C and i pi for a PPP or EIDL, what happens? Does the loan reverse and I have to pay Uncle Sam? Yeah, that's what happens is they run up on you.

Pamela Capalad, CFP, AFC :

They find you back to PPP money.

Dyalekt :

If you are applying for a PPP, you're gonna get your own. money from Nile.

Pamela Capalad, CFP, AFC :

That's the rotation right there. So if you made negative money in your schedule C you don't qualify for PPP loan money.

Dyalekt :

Yeah, that's why we're saying that like it sucks about people who are like downturn or new business or pivoting or anything like that where it's not gonna be like, businesses we know what are you been doing this for 10 years, right? This is the one year you're like, I'm trying something new. So we're at a loss because we r&d and you're assed out, yeah, like I said, somebody's gonna have to address that at some point. But we'll see.

Pamela Capalad, CFP, AFC :

For EIDL though, if you go to your schedule C and you look at your gross receipts, which is line one on your schedule C, you do qualify for EIDL and you qualify for half of that amount. So if there's $50,000 in line one, the EIDL will offer you a $25,000 loan so you still can get the EIDL money but not PPP money you have to have made a profit on your schedule C, unfortunately, yeah.

Dyalekt :

Oh, okay. Look. Oh, yes, another good one. Um, should I wait until after July 31 when the 600 The unemployment stimulus ends to start my PPP loan or can I start my PPP loan now as a sole proprietor.

Pamela Capalad, CFP, AFC :

So here again, this is the part that we don't know but from what we understand based on what the rules are now we're saying this caveat disclaimer all of this stuff from what we understand they are going to basically do 100% forgiveness on PPP loans. So I'm gonna look up this Forbes article right now. Brian Thompson Yeah, I'm gonna look at this Forbes article right now PPP and then freelancers here Yeah, SBA finally clarifies forgiveness rules full forgiveness for self employed borrowers. That is what the article is called. It's by Brian Thompson. It's a Forbes article, and they basically said that... what does it say specifically, if you're a freelancer, wondering if the forgiveness loans will be forgiven yesterday brought good news. The SBA filed its 19th rules scheduled to be published on Friday, blah, blah, blah. The unpublished version of the update ensures full forgiveness for self employed freelancers and independent contractors to took out the maximum loan amount based on two and a half times their income.

Dyalekt :

Thanks for putting the link up. Oh my god. Thank you. Thank you. Again shut up Brian Thompson for looking out for us.

Pamela Capalad, CFP, AFC :

Yes, it's so great. So yes, as a self employed person from what we understand the forgiveness form that you're going to be required to fill out is a simplified forgiveness form because there is very little to calculate. They're basically just going to forgive the full amount and so we don't know how they're going to take unemployment into account there. Yeah. From what we know. It doesn't seem like the to mix at all. If that makes sense. It doesn't seem like because you got employment, you don't get the PPP loan forgiveness. It seems like PPP is one thing. And unemployment is another thing.

Dyalekt :

Yeah, we're asking everybody to just document everything they can as much as they have. So when people come to audit you or ask what's going on, you have some kind of narrative. You can tell them yeah, that's we got I wish we had more. Yeah. Another one I might be booking work soon. Can I still get the PPP and work at the same same time? Yes, you can. Yes, get the PPP and work.

Pamela Capalad, CFP, AFC :

Yeah, PPP is not designed for people who are unemployed. The confusion happens when you are unemployed as a freelancer and also qualify for PPP, but PPP was designed to help small businesses get through the pandemic. So if you're able to get work still, you still qualify for the PPP.

Dyalekt :

Yeah, that $600 unemployment is for the time that you can't work or haven't gotten work or there was some gap and getting paid for it. So you know, you probably or may have qualified for unemployment in period before you were able to get work.

Pamela Capalad, CFP, AFC :

Yeah, yeah, exactly. So let's talk about where you can get Oh, do you have another question?

Dyalekt :

Well, one one very specific one. I've been meeting with y'all this month, should I wait to apply so that he can be walked through it?

Pamela Capalad, CFP, AFC :

Oh, yes. So if you already have a meeting scheduled our financial planner will walk you through it. will Yeah, whoever you haven't scheduled with will do that.

Dyalekt :

Oh, and you know, another one. I worked everyday people actually how I got introduced to yo shout out everyday people we love everyday people. Every version of everyday people. So we were out of play for a long time trying to rack up everything I possibly can. Oh, thanks. Oh, really glad to learn all these things. I thought there was a question at the end, but I was just reading cold. But thank you for the love. We appreciate it.

Pamela Capalad, CFP, AFC :

Yes. Oh, I will say there's I think only one or two appointments left before the deadline for PPP. So

Dyalekt :

Yeah, if you want to make an appointment reach out quickly. I mean, there's again, why we're doing this live here now. Yes,

Pamela Capalad, CFP, AFC :

exactly, exactly. Because there are a lot of questions. Also, I will say also keep

Dyalekt :

asking questions now.

Pamela Capalad, CFP, AFC :

Please keep asking questions. Now. Let's talk about where to apply, because it's actually with a lot of these online lenders not that difficult to apply. So we actually have a report from NCRC. I don't know if you wanted to.

Dyalekt :

Okay. Yeah. Well, I mean, yeah, I mean, this is not the exciting happy part, the doom and gloom. So the National Community Reinvestment Coalition who is Dedrick Asante-Mohammed works with that we do the preach to the choir show, they released a report about lending discrimination within the PPP. And it's all the stuff that you're expecting. So I'm just gonna read this straight out. So the difference in treatment that they found this is their big thing. A fair lending analysis of the individual match pair test found that 27 out of the 63, 40% of tests revealed a difference in treatment in violation of fair lending laws. We observed the difference of treatment experienced by the black testers through difference in levels of encouragement, difference in products offered difference in information provided and a difference in the information requested. Of the 17 different financial institution tested in the audit 13 institutions had at least one test that showed the control tester was favored. Black females received worse treatment in 59% of the tests that we found a difference of treatment in. Overall there were 49 different instances of discrimination that black testers experience. 63 people Yes, so that was a smallish But enough of a sample size for folks to see the discrimination that's going on.

Pamela Capalad, CFP, AFC :

This is specifically for PPP loans to so this is like brand new 2020 COVID pandemic, and they couldn't so the way they tested it is because

Dyalekt :

by the way, I don't know anything about unemployment getting extended, you know, wish we did like my general feeling is like, I don't feel like it is just the way that the federal government has been on the like, next step stuff. It's like, reopen this that and the other thing I feel like they're not gonna do that. But like, this is me not knowing anybody behind the scenes.

Pamela Capalad, CFP, AFC :

Yeah, yeah. But um, yeah, sadly, unsurprising. Yeah, my invisible knapsack. Yeah, it's it's true. It's and the way that they did it was actually on the phone. So they actually they used names that were black sounding names, and they tested the voices to see if you could perceive someone's race through their voice so that they can tell who was black and who was white, basically.

Dyalekt :

Very similar to the Greg and Emily test where they had ethnic sounding names, black sounding names, latino sounding names on resumes.

Pamela Capalad, CFP, AFC :

Yeah, yeah. So they did this over the phone, and this happened over the phone. So what's great about where you can apply now is that there's a lot of places you can apply electronically. I would try your existing bank because they might have electronic ways to do it. I would avoid calling because of studies like this if you can. And there's actually a really great article from bench.co on a list of PPP lenders, the ones that clients have had success with are cabbage with a K, that's been the big one. We've had people apply at PayPal. So even if they check your credit there, as you saw, their standards or their rules for approving application are a little less strict. Lendio, Fundera, Funbox and Bluevine and then all the big banks are still doing it too. Yeah, it's absolutely horrifying, Valerie. Yeah,

Dyalekt :

yeah. Well, I was looking through I was gonna bring up some some things like some of the specifics about it, like the thing that really bugs me, I think is the advice and encouragement part because it's the part that feels the most familiar to me that like, I know these stories, and I've been in these situations myself, and like there's this one where like, a black tester called and they were told before receiving any information about products, they would need to come into the bank in person. The quote is she told me that since I was not a current blank bank customer, that she would have to physically identify me. She offered to make an appointment for me to come in to the drive thru she got identify me and view my state issued ID and driver's license. The white tester was given specific information about the line of credit and secured loan including interest rates, fees and approval times the white person did not have to come in for any of that. They just gave them all of that

Pamela Capalad, CFP, AFC :

In a pandemic?

Dyalekt :

Yeah, I mean, they were like, Hey, you can do a drive thru but they were like, We need you to come in because otherwise, so like there's this, these barriers that are put up these things we were asking you as well. We often talk about, you know, the Zuckerberg kind of thing of like folks with wealth, they can take risks, but when you don't have well It's not a risk. They're asking you to make a sacrifice.

Pamela Capalad, CFP, AFC :

I mean, one thing that I want to address too is that there are a lot of people who I've run across when we talk about PPP, who said, You know what, I don't really need it. My business is actually doing fine right now. Like, I want to leave that money for the people who really need it. Yeah, Kanye just got a PPP loan for $2 million. Y'all. The Lakers got a PPP loan for $4 million. Shake Shack was shamed into returning their $10 million PPP loan that they didn't need either.

Dyalekt :

They didnt give it back?

Pamela Capalad, CFP, AFC :

No, I don't think so. Yeah, I don't think so. Yeah, no, it is wild. So the thing is, oh, there's the baby. Yes. So the thing is, you should apply for this money. We don't know what this year is gonna be like at all. We don't know what's gonna happen. And this money is yours. This money is there for you. There's still over 100 billion dollars left in PPP

Dyalekt :

if you don't know what to do with it, and there's other folks who would need it. At least you've got it. So you know how to do that. to them.

Pamela Capalad, CFP, AFC :

Yes, exactly. Example, we're literally filling out a meeting right now. Yes. So PPP will probably not run out. There's $130 billion left. And that's why they extended the program because all of the money didn't get taken out. Just to give you some perspective $130 billion is Oh my god, what is it like? 100 million 100? A million millions? Yeah, so the loan sizes that are coming out are like $5,000 $20,000 $50,000. So I don't think the money is going to run out also, from what we've seen, and what we encourage is, try applying yourself, try going on cabbage, try going on bluevine. Try going on any of these online lender sites. If you Google PPP loan lender, you'll find a list really easily Oh, you'll find this really easily and the application is actually not that crazy. It's the supporting documents that sometimes trip people up like if they're asking for your tax return and your business bank account statement or something like that, but the application itself isn't too crazy. What I would suggest is try applying yourself now before you book the appointment. And if you run into any issues at least you will have started the application already and you know what questions you have. So I would definitely start there. Let's see. And then can you get a PPP and have w2 income? Yes, you can. Yes. Yeah, that's the best part. Oh, yeah. We have the youth he woke up from his nap. Oh, hello. Y'all talking about PPP. We are talking about PPP and you. Alright, right. So you can get a PPP loan and have w two income as long as you also have Schedule C income. So you can have w two income now from what we understand as long as you have Schedule C income last year. Yes, America knows how to waste money.

Dyalekt :

Yeah, that's one of the tough things about all of this money stuff. And what we're doing here is like, we're seeing lots of ways we're seeing lots of misuse, lots of discrimination and you're like, well, what can I do? I'm like if I asked for a little bit I'm like contributing to like glut? Yeah, no, I understand that. I really understand that instinct.

Pamela Capalad, CFP, AFC :

Yeah, yeah. But this is again, this is an unprecedented program. This money is for freelancers as money as to help keep us afloat. So take it.

Dyalekt :

Oh, here's a good question. Shout out what sites or places do you trust? who think do good work for doing taxes? I love that question. We actually had someone on one of our last studio sessions before we started doing it from Instagram Live Yeah. Tree House tax taxes. We love them. I love them. They're really great people we what was the episode? No.

Pamela Capalad, CFP, AFC :

No, but it was recent. It was in February.

Dyalekt :

Yeah, it was very recent. You can find it look up treehouse, all with one word taxes. They came and spoke to us and they do a lot of really great work there. So

Pamela Capalad, CFP, AFC :

Also, if you go to brunchandbudget.com/accounting, you'll find their info on there as well. Yeah, I don't care. TurboTax do not use TurboTax they make you pay Anyway, you may as well pay an account. I love that comment. Yes.

Dyalekt :

Thank you. Hey, I joined late. But did, I hear y'all say PPP requires an operating profit and not a loss in the 2019 tax return.

Pamela Capalad, CFP, AFC :

Yeah, so your schedule C on line 31 has to have a profit. And the reason why is that's how the loan amount is calculated. So we did it earlier with tenor and you take your 2019 profit on your schedule C. So line 31, you divide that number by 12. And you multiply it by two and a half, and that's what your loan amount is. And so if you have a loss, then you won't qualify for PPP loan unfortunately, but you do qualify for EIDL. So the EIDL loan is not forgivable. But if you need some money to have some runway for your business, I highly recommend applying for the EIDL alone. Oh, I gotta finish my app. Oh, yeah, yeah,

Dyalekt :

yeah. Oh, yeah. Yeah, I like that. You can use TurboTax but only directly to the IRS site. Thank you for the clarity and specificity. Yes. Would be nice to see them expand the amount of PPP proceeds but only received enough to sustain my business for you only receive enough sustain your business for two months. Yeah, yeah, well, that's the thing that sucks about these huge businesses who have runway already and they're going to be fine for the next couple months, if not couple of years true is that they're getting all these huge sums of money that I know a number of smaller businesses and growing businesses ought to be getting

Pamela Capalad, CFP, AFC :

Yeah, and could have used in the first place. The reason why the reason why the two and a half months of expenses actually came up, is because the government thought this was gonna be over in two and a half months when they first put out the cares act.

Dyalekt :

By the way, I know that we've like gotten really swept up in the whole political president thing being the whole be all, end all of like what we vote for. But as we're being like, No, I don't really know what's going on with these developing businesses. Remember that we're all citizens, too. And that should be something that comes up for next election is like what's going on with that? All right. Oh,

Pamela Capalad, CFP, AFC :

yes, question.

Dyalekt :

Yeah, if you owe taxes last year, can you still get If you're talking about the PPP?

Pamela Capalad, CFP, AFC :

yes, as a freelancer, you probably did owe taxes last year because you made a profit, right?

Dyalekt :

yeah. So as a freelancer Yes.

Pamela Capalad, CFP, AFC :

Yeah. So if you if you had a profit and your schedule C, you most likely owe taxes because that's just the byproduct of being a freelancer. So yeah, absolutely. And just

Dyalekt :

give them the math. Yep, you made 115, then it would be 115 divided by 12, multiply by 2.5. And that would be how much you're eligible.

Pamela Capalad, CFP, AFC :

That's exactly it. That's the math. That's the math. And a lot of these online lenders will do the math for you. So they're gonna ask you, what did it say online 31 of your schedule C, and then they run it through their calculator, and they'll tell you, you probably qualify for this loan size. So what's great about that 24 grand, alright, that's a good loan amount. So Oh, wait, one caveat, though. You're only allowed to apply for up to 100 k of income. Oh, yeah. So you're a solo freelancer, you're only allowed to apply for up to 100 K. So it's capped at 20,000 something something? Yeah, so that'd be around 20. Yeah. So that's something to keep in mind too. You can only get a bigger loan if you have other employees that you're covering their payroll for. Yes, that is a great question. Okay.

Dyalekt :

Let's talk about finished. Yes.

Pamela Capalad, CFP, AFC :

Well, yeah, I have some lingering frequently asked questions that often come up. Common Questions. Can home office expenses be forgiven? Yes. Yeah. Yeah. So you can actually write off your home office if you're in a situation Oh, you know, we didn't talk about is if you have an SCorp. So if you have an SCorp, you're not looking your schedule C, you're actually going to be basing your PPP loan amount on what you paid yourself through payroll. So if you have an S corp, you are required to run payroll for you to be able to qualify for it. Yeah. And then oh, and then okay. 20 g cool, and you don't have to pay any money back? No, as long as you remember to apply for forgiveness, in 24 weeks, you do not have to pay the PPP loan back at all. It's amazing. They extended the forgiveness period to 24 weeks and someone if you scroll back in the comments actually posted a Forbes article that confirmed that for all solo Freelancers, the loan will be 100% forgiven. It's super annoying that they call it a loan. If they're just saying like, it's a grant, but if you don't use it the right way, then you have to pay back.

Dyalekt :

Well, that's the part of being having to apply for forgiveness. It's like the Publishers Clearing House if you guys ever applied for one of those, they're betting on a few people not asking for it back.

Pamela Capalad, CFP, AFC :

Yeah, yeah. And then how do you calculate how much income is forgiven? We've talked about that already.

Dyalekt :

No, that's a good place because I thought you said you had an escort. I mean, if your escort has an S corp,

Pamela Capalad, CFP, AFC :

yeah, if you're, I bet a lot of escorts have an S Corp. That's a really great tax structure. I would definitely recommend that actually.

Dyalekt :

I'd really love to listen to that that band that'd be a great man escorts with SCorps.

Pamela Capalad, CFP, AFC :

Escorts with SCorps?

Dyalekt :

It'd be all about like pro sex work. anti-capitalism

Pamela Capalad, CFP, AFC :

Hell yeah. I'm so down for that. I want to do their financial planning.

Dyalekt :

Start that band , y'all any genre any genre I was trying to think of like, what a good rapper wouldn't be the rock band, what would they play and it doesn't matter

Pamela Capalad, CFP, AFC :

or they could also just be escorts like actual escorts?

Dyalekt :

No, no, no, they will But I also want to hear them play multitalented concert. Dan I love it Stephen King is in a rock band.

Pamela Capalad, CFP, AFC :

Oh, he is multitalented.

Dyalekt :

with other with other writers. I don't know if it's good.

Pamela Capalad, CFP, AFC :

So what happens to the Unforgiven loan amount? That's another common question if there's any loan amount that is not forgiven for whatever reason, you can pay it back at 1% interest over five years. Yes, heavy EDM, we already got the genre. There you go. That's actually perfect. I love it and then do they check your credit. We talked about this before the SBA does not require the lender to check your credit but the lender can choose check credit most lenders are not checking your credit. We know PayPal definitely is checking your credit. A lot of other lenders are not including the online lenders that we mentioned. I just want to mention them again. bluevine lendio fundera, cabbage cabbage with a K is again a place that a lot of our clients were able to actually get loans really easily and successfully. Their interface was really easy to use. I do recommend them just from personal experience, um and then is the forgiven amount subject to Taxes. So that's a question. It's tricky. I used to think the answer was just no. And technically, the answer is no, the forgiven amount is not subject to taxes. The caveat is the forgiven amount. You cannot take any deductions on the forgiven amount. So you get it. Yeah.

Dyalekt :

So it's not exactly that it's not subject to taxes. It's not subject to taxes that you have to pay out later. Yeah. So

Pamela Capalad, CFP, AFC :

the way that it works is let's say you got that $20,000 loan you made 50,000 more dollars that year, you have $70,000 of expenses still or you have let me see no, you have a $50,000 income you know, $20,000, PvP loan that was forgiven, and you have Yes, $60,000 of expenses, let's say, so that PPP money. You can't deduct any of the expenses against that PPP money. So it's a little tricky. Talk to your accountant. Our accountant told us that and I was like, I don't even really get it, y'all. But it's technically not subject to taxes. Unemployment is subject to taxes. But PPP loans are not subject to taxes, even though there's like, you know, even though there's this sort of tax up thing, but you know, this like very, very strange loophole very, very strange loophole. Oh, yeah,

Dyalekt :

we should be shut out all the deadlines.

Pamela Capalad, CFP, AFC :

Let's shout it all the deadlines. I love it. Can you shout out all the deadlines? Yes. So pandemic unemployment assistance, the extra $600 a week is ending July 31. The deadline for PPP is August 8, and the deadline for EIDL as far as we know, is December 31. But the SBA has taken away and put back this loan in the last like three months, so we don't know what's gonna happen. So yes, can you take negative 10? Yeah, you're you're getting you take a business loss of negative $10,000 I think is what I understand. Oh, you do your own schedule. See, of course you do. Of course you I'm not surprised. And then we had it. Question also I applied for EIDL on July 1 and haven't received the advance. I saw a Forbes article post. Yes, Valerie br amenti. You were the one who actually gave us a heads up on the fact that the advances we were had run out on July 11. I'm not sure if people who put in applications before the 11 they're going to get their advances. That's the big question mark. One then you have another great question. Yeah.

Dyalekt :

Is the EIDL grant deducted from the forgiven PPP? Oh, that's so great

Pamela Capalad, CFP, AFC :

is yes, that is a great question. I know. So the EIDL if you got if you got the one k grant, then one k of your PPP loan is not forgivable. So you may want to use that EIDL grant to pay off the remaining one k on your PPP, or you can just it's a 1% interest over five years. It's basically free money in and of itself based on that loan structure. So you can also just pay it back slowly over five years that $1,000 if you don't want to pay it back right away. Not a big deal at all.

Dyalekt :

lot of great questions for you for in chat and in the in the thing Oh yeah, I'm sorry I missed this before but where can you apply ever really good relationship with Bank of America? Should I go through with them?

Pamela Capalad, CFP, AFC :

Yes. So Bank of America is only taking applications until July 24. But if you do have a good relationship with them, I'm guessing all the big banks by this point I know chase definitely does. They have online applications so it should be pretty easy to apply through Bank of America. I know there was some drama with Bank of America not accepting certain customers even though they were customers for PPP. Well,

Dyalekt :

as we were discussing in the report by NCRC that you know, we will also make available in the show notes so you can check that out. There's a lot of that stuff going on. Yes, whenever I see Bank of America I always think of the in the initials I always think boba and I was like,

Pamela Capalad, CFP, AFC :

Ooh, that sounds like a delicious thing.

Dyalekt :

I'm really messed up with all the initials today. I was looking at Valerie's thing I was like, Valerie is your last name Big Red Mutant Ninja Turtle.

Pamela Capalad, CFP, AFC :

Oh, you guys are so welcome. But yeah, so you can go through Bank of America, you can also go through one of these lenders that we've mentioned before. Again, a lot of these online lenders are really, really like has been super easy to go through. I have a number of clients opened up.

Dyalekt :

The whole thing with these online lenders is it's kind of their time to shine. Yeah, you know, everybody trusts the bank banks. And for a lot of things like this people wouldn't mess with them. People wouldn't think of messing with PayPal, and they felt like hey, we're here. Yeah, we're here. It's probably why that they instituted the credit check thing because they I wouldn't be surprised if they got overwhelmed.

Pamela Capalad, CFP, AFC :

Yeah, I'm sure they did. And Kabbage with a K. There. Yeah, their actual loan products are kind of sucky. They are I've looked at them, but they're great on their PPP loan technology. ,

Dyalekt :

Wow Boba Fett that that makes. That makes a lot of sense. It's made a whole bunch of money. It's really popular and it dies really easy. You infuse it with a ton of money. Make sense?

Pamela Capalad, CFP, AFC :

We're talking about Valerie's last name.

Dyalekt :

Yes. consonants. You know, there's there's a Twitter account that only posts Wikipedia entries that rhyme with Teenage Mutant Ninja Turtles.

Pamela Capalad, CFP, AFC :

Oh yeah, that's a good one. Yeah, that's a really fun one. That's a really good one random stuff. Okay, and then one final comment. I think this is great.

Dyalekt :

Yeah, I think with Bank of America and Chase, you need to have a business account with them. That's really important.

Pamela Capalad, CFP, AFC :

Yes. Okay. All right. I think we gotta sign off, baby. Let's

Dyalekt :

We'll give you our last artist. It's song called free money. This one coming from Italia. So I don't know exactly what they're saying in the word bambino. And some other words like that come up. So they say a bunch of horrible stuff, my bad is called free buddy, from Monkey Marcos. And we'll check you guys Next time Thank you y'all. All right. Thank you. This is brunch and budget. If you guys have questions about any of this stuff, please feel free to reach out. We know that the deadlines are coming up soon. Make an appointment as possible. Leave stuff in the comments, hit us up on any of the socials, any of the things if you're feeling the show, there's other things that you want to know other areas that you want us to go into other types of discrimination you want to find out hate us, rate us debate us and all the places that you know. Thanks, y'all. We love y'all be well keep it on going peace.