How’s that for a title?

I’m sure you’ve seen the news about how Schedule C clients got more or less “locked out” of the “forgivable” loan program called the Paycheck Protection Program (PPP).

LOT of super bitter sole proprietors who are looking at these larger companies like Ruth’s Chris and Ritz Carlton that got PPP loans and then “Jim’s Barber Shop” and “Nancy’s Hair Salon” got nothing (as usual).

And I get it, I do understand the frustration, not disrespecting that frustration at all.

Politicians (and the media) completely over-promised and under-delivered on the first round of PPP, no doubt about it.

At the same time, as a tax professional, be careful of engaging in that super bitterness and acting like “all is lost.”

A “glass half empty” attitude can lead to major missed opportunities in this fast-moving environment.

Clearly they “took care of” the bigger employers first, with the first round of PPP funding. That’s obvious to anyone who has reviewed the PPP statistics.

Another Round of PPP

However, all reports suggest that Congress is going to approve another round of PPP funding this week, at around $300 billion in additional funds.

And for those smaller business owners who already have applications submitted, the banks are continuing to process those applications, and I am pretty sure they would not be wasting their time and money doing that if there weren’t going to be more loans funded–right?

If your clients (and/or you) missed the first round of PPP Festivities, well, now’s your chance to make sure they (and/or you) don’t miss the second round.

Non-Bank Lenders

Non-bank lenders such as PayPal and Square now have their PPP loan apps live, and for many clients, these may be more viable options than the big banks.

Word to the wise here though, the banks are requiring Single Member LLCs and sole proprietor Schedule Cs to either submit the 2019 tax return or at least a “draft” of the 2019 Schedule C before a PPP loan will be approved.

Although they said, at first, that they would allow “alternative” methods of documenting self-employment income up to and including using 1099s, profit and loss statements, and even bank statements as proof of income, the SBA has now clarified that all funding will be based upon that 2019 Schedule C tax return.

So, if you’re asking yourself “how can I get paid related to PPP loans,” the easiest answer is to charge for the 2019 Schedule Cs that all of a sudden will become a top priority for those sole props applying for PPP funds this week.

Do This Now With Your Tax Software

I’m sure you’re aware that you can run a report in your software and see any “unfinished” Schedule C returns you have in your database. Any of those clients who plan on applying for a PPP loan (or finalizing one for which they’ve already applied) will need at least a draft of 2019 Schedule C to be considered for funding. Probably a good idea then to run that report in your software and let clients know not to wait until July to file their return if they want to apply for any PPP funding?

Just an idea for you, in case you want to make money this week 🙂

How To Approach Clients

I highly and yet humbly advise you to NOT fall into the trap of “advertising” this program to your self-employed clients. Like it’s some kind of “fix all solution.” This approach entails way too much risk of disappointment, sometimes including them blaming you if they don’t get a loan (or the loan goes sour, i.e. they don’t spend the funds right, so it turns into a real loan that must be paid back).

Instead of “advertising” and “advocating” for the PPP loans, let’s focus on PRESENTING the information to our clients, and encourage them to take responsibility for their own business survival. With all due respect, those who are not prepared to take responsibility for their own business survival will not survive in the world of small business anyways, so let’s just get that reality out into the open.

Your Client’s Wish

Several of my own self-employed clients have told me they “wish” I would just “handle all this for them” (loan application, etc.) and they could pay me for it.

My 4-year old daughter wished for a unicorn to appear in our front yard on her recent birthday and that didn’t happen, either.

This was a “tip of the week” sent to those on our email list who open our emails and participate in our community. We appreciate YOU and I hope this tip is helpful to you as we begin another week of major tax-related developments…