I Have My PPP Loan For My Business Now; what Is The Most Effective Way To Spend It For My Online eCom Business/Agency/Consulting Brand?

I have my PPP Loan for my business now; what is the most effective way to use it for my online ecom business/agency/consulting brand? 

This is Part 2 of a 3-part series, and if you haven’t checked out Part 1, I highly recommend you check out that video first before watching this. So this video assumes that you have been accepted for a PPP loan and have the funds in your bank account. So the most important thing to remember is to track all your expenses immediately, as there is a chance for an audit, mainly if your PPP loan amount is above $1M. You want to prove you are using the funds to maintain your workforce.

So the most recommended path to use your PPP loan is in this order: 

Direct wages/Salary, health insurance, benefits, and the associated payroll taxes. That should make up 60% of your loan. The remaining 40% should go to Utilities (Water, electric, gas, etc.) and the cost of your rent or mortgage.

One important thing to note is that you must prove that you had this bill or utility in your business before the COVID period started. This means you can not go and create a new tab with an electric company and try to claim this expense. You must prove to your banker or whoever you get the PPP loan from that this expense or rent/mortgage existed before the pandemic started, so that is something to keep in mind. 

Why split your PPP loan this way? 

It’s essential,t to split it this way. If you apply for forgiveness for this loan, you will have a greater chance of meeting all the qualifications to get your entire loan amount forgiven for your business. That’s right; this loan has a forgiveness component that could mean you would not have to pay back a single penny on this loan if you set it up correctly.

Paying For Salary Using PPP

Also, there’s an important note to remember for Salary. The salary amount per employee cannot exceed $100,000 annually Salary per employee, so if you have someone that makes, say, 140,000, then you need to round down that employee’s Salary to $100,000. The SBA allows you to spread the loan over 8 week or 24-week period. In most cases, you will want to apply this over the extended period to ensure most of the loan will go toward direct payroll costs, increasing the chance that the loan will be forgiven.

The PPP loan is a great program, and I highly encourage your business owners to apply for it. Even if the loan is not forgiven at a 1% interest rate, it is a great tool to ensure you have the cash flow to maintain your business long-term as we get past this COVID economic period. 

You have until March 15th, 2021, to apply for the loan, and I would say the sooner, the better, as you will have a better chance of being further ahead in line to get a piece of the pie. If you have any questions about the PPP loan, please comment below, and I will answer them. 

Additionally, if your business is looking for an all-in-one solution to save on taxes and have great bookkeeping done on your behalf, or if you need more guidance on the PPP loan, you can click the link in the description and book a free consultation call with FCF Agency. We will see if we can be a great fit together. Remember, we only take on clients that we can impact, so if we are a great fit, get ready to maximize your profit this year.