Episode 180: The CARES Act: Financial Help for Therapists During COVID-19

Summary

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Private Practice Startup Podcast

Episode 180: The CARES Act: Financial Help for Therapists During COVID-19

Hosts: Dr. Kate Campbell & Katie Lemieux
Guest: Jenny Shadmieller, LMFT & CPA
Date: April 4, 2020

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Episode Overview

This special episode dives deep into the CARES Act and its specific financial relief options for therapists and private practice owners affected by COVID-19. Featuring Jenny Shadmieller, a unique expert with dual credentials as an LMFT and CPA, the discussion addresses confusion about eligibility, application processes, and strategic use of relief funds—focusing on clarity for therapists seeking to stay afloat during unprecedented times. The hosts facilitate a Q&A-driven, practical guide for navigating unemployment, grants, and loan options.

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Key Discussion Points & Insights

1. The CARES Act—Context and Key Options

• Impact Recognition: The pandemic has forced rapid changes and significant income loss for many therapists, especially as clients drop off or therapists transition to telehealth.
• Mindset Shifts: Jenny repeatedly encourages listeners to "be kind to yourself" when making tough financial decisions in an environment filled with stress and uncertainty ([03:52]).

2. Help Available & Eligibility

• Forms of Business: All business structures (sole proprietor, LLC, S-Corp, C-Corp, partnerships) can benefit. The key distinction is between employees and independent contractors (ICs).
  • ICs are not employees: "Your independent contractors are business owners just like you, which means they can take advantage of these programs as easily. Don’t take care of them financially—they need to do that themselves." (Jenny, [03:52])
• Three Main Relief Routes Discussed:
  1. Unemployment (including expanded benefits)
  2. Economic Injury Disaster Loans (EIDL, includes $10,000 grant)
  3. Paycheck Protection Program (PPP) Loans

3. Unemployment for Self-Employed & Therapists

• CARES Act Expansion: Self-employed, LLCs, and sole proprietors now qualify for unemployment, even if they haven't traditionally paid into the system ([13:06]).
  • Notable: "They expanded [unemployment] to self-employed individuals, which is crazy because we don’t pay into self-employment!" — Jenny ([13:06])
• Partial Unemployment: Varies by state; check your own state’s updates regularly ([15:58]).
• Action Steps:
  • Regularly check your state's unemployment website for rollout updates.
  • Eligibility for partial unemployment depends on whether your state offers it.

4. Economic Injury Disaster Loan (EIDL) & The $10,000 Advance/Grant

• Streamlined Process: Now a simple, three-page process. "You do NOT need to pay anyone to do this loan application for you." — Jenny ([17:48])
• Key Details:
  • Must have been in business as of January 31, 2020 ([24:06]).
  • Gross Revenue vs. Cost of Goods Sold: Therapists/providers almost always enter $0 for “cost of goods sold” ([22:20]).
  • The $10,000 advance is a grant: “Click the button for the advance! It should just say, 'Would you like $10,000, no questions asked?'” — Jenny ([29:02])
  • Use Advance for ANY business expense—no restrictions or required documentation ([68:02]).
• Eligibility: Types of business structure don't matter; even if you haven't formed an LLC, being a sole proprietor qualifies ([25:18]).

5. Paycheck Protection Program (PPP) Loans

• Who Applies: Available to businesses with or without employees; ICs can apply independently ([34:08]).
• Amount Calculation:
  • "You add up payroll cost, benefits, payroll taxes, and self-employment income for 2019—divide by 12 for the monthly average, then multiply by 2.5 to get your loan request." — Jenny ([40:28])
  • Cap: Payroll costs capped at $100K per employee ([40:28]).
• Usage Restrictions:
  • 75% must be spent on payroll; max 25% on rent, mortgage interest, utilities ([43:13]).
  • Documentation is essential for loan forgiveness.
• Loan Forgiveness: If you use funds as required and document everything, it’s forgiven; if not, only what was properly spent is forgiven and the remainder is repaid ([44:02], [46:33]).
  • “If I times at times point two, if I get a $25,000 loan, I have to use $18,750 on payroll costs or more, and the remainder can go to my rent.” — Jenny ([43:15])

6. Can You Apply for More than One Program?

• Yes, but with caveats: You may receive both EIDL and PPP, but can't “double-dip”—must use funds for different expenses and cannot get forgiveness for the same expenses twice ([57:11]).
  • “You can apply for both and convert the EIDL loan into a PPP loan... but you already got $10,000 forgiven, so they won’t forgive another $10,000 a second time.” — Jenny ([57:11])

7. Documentation and Organization

• Recommended: Keep a business bank account, profit and loss statements, clear payroll records, and all related documentation for any claims ([48:31]).
  • “No judgment if you’ve mixed business and personal; going forward, only business transactions in your business account!” — Jenny ([49:02])

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Notable Quotes & Memorable Moments

• Self-Compassion in Crisis:
  • “We are not in a good environment to be making decisions, but we need to make them... If you can do that, you’re probably going to be able to live with your decision, but it’s just difficult right now.” — Jenny ([03:52])
• Receiving Government Help:
  • “This is too good to be true. When has the government given free stuff and really helped out?...But it’s actually in line with all the programs!” — Katie ([10:25]), Jenny ([11:21])
• Therapist Money Mindset:
  • “Some of them are like, ‘Well, maybe more people need this than me...’ If you’re having some stuff come up, this is a good time to begin to look at your own money conversations and your relationship to...clear that.” — Katie ([29:43])
• On Applying for Help:
  • “You don’t gain anything by including [independent contractors], and you don’t lose anything by not including them. Help your ICs fill out their own applications!” — Jenny ([51:55])
• On Loan Forgiveness:
  • “Forgivable means you don’t really have to pay it back... If you used it for college, grandma’s happy; if you bought a car, grandma wants her money back.” — Jenny’s analogy ([44:02])
• Practical Encouragement:
  • “You can do this... Sit down and write it out: this is what this path looks like for me. You are empowered as the business owner to decide what happens.” — Jenny ([38:31])
• Clarity for Solo and ICs:
  • “If you’re an independent contractor, you are self-employed—the distinction is more about where you work. When it comes to the PPP, you only apply once for your whole business.” — Jenny ([64:09])
• On Taxability:
  • “The PPP loan forgiveness is specifically not taxable. For the $10,000 grant, we don’t know yet—but if it is taxable, your business expenses should offset it.” — Jenny ([75:29])

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Timestamps for Key Segments

• Introduction, setting the stage: 00:31–03:52
• Guest intro and mindset on financial decisions: 03:52–06:49
• Clarifying IC vs. Employee status: 06:49–08:13
• Overview of three support options: 08:13–10:25
• Unemployment explained (expanded coverage): 13:06–17:24
• EIDL / $10,000 grant detailed: 17:48–32:09
• PPP Loans step-by-step & forgiveness: 34:08–46:18
• Documentation, business practices: 48:31–49:02
• Live listener Q&A (various practical nuances): 49:29–75:29
• Closing reflections: 77:39–79:11

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Practical Takeaways

• Apply Early, Stay Informed: Relief options are time-sensitive and may evolve. Regularly check official resources and your state-specific guidelines.
• Be Proactive, Not Perfectionist: In times of confusion, doing “your best with available information” is key.
• Clarify Your Entity & Revenue: Know your business status and how/where your revenue comes from before applying.
• Help ICs Help Themselves: Share resources, don’t try to “protect” them by misclassifying pay.
• Keep Records, Separate Accounts: If you haven’t before, now is the time to separate business and personal finances for clarity and compliance.

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Further Resources

• Jenny's Resource Page: Linked in the episode for detailed guides, sample forms, links to SBA, Treasury, and IRS info.
• State Unemployment Sites: Check for updates on partial unemployment options.

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In the Words of the Hosts...

“I just want to acknowledge you guys as therapists...I know you’re going to be doing amazing work for months and years after this for the impact that’s really affecting humanity.”
— Katie ([78:01])

“Thank you for sharing your superpower with us...You really do have a gift at being able to simplify things.”
— Kate ([77:39])

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This summary is designed to help therapists in private practice confidently navigate financial relief options under the CARES Act and make strong, well-informed business decisions—without having to decode bureaucratic language or sift through misinformation.

Transcript

[A]

Welcome to the Private Practice Startup Podcast where we help ambitious private practitioners across the globe to brand themselves and grow their dream practices. We chat with successful private practitioners, business coaches and marketing experts bringing you tons of practice building Ninja tips. Visit privatepracticestartup.com for awesome resources, attorney approved private practice paperwork and our signature marketing E course. Here are your co hosts, Dr. Kate Campbell and Katie Lemieux.

[B]

He start of Nation. My goodness, like there is nothing worse during a crisis. My palms are so sweaty. To bring you this really updated information and we're attempting to go live. We are telling you we're going live and we can't get into Facebook. My hands are so sweaty. I feel so bad disappointing you. We all do. But we're going to bring you the information the best we can anyway and your grace and compassion is greatly appreciated. This is Katie from the Private Practice Startup and I am accompanied obviously by my business partner. Well to my left is Kate Campbell and a very special guest with us today which is Jenny Shotmiller, LMFT and cpa. We are going to be talking about the CARES act and how that can help you, your family, your team during this time to your business, your finances. I know you guys have a lot of questions. Kate is womaning the chat over there on Facebook telling you to post your questions. We're going to try to get all of those answered. So this was supposed to be a Facebook Live, so we're simultaneously doing this as a video but also a podcast. So we wanted to take a quick moment to thank our sponsors.

[C]

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[B]

Ado, just a brief thing About Jenny Jenny actually had joined us back on another one of our episodes. I think it was episode 136, so we'll go ahead and post that in the links for you guys as well. I wrote it down, you know that life is on the fly guys and we are not our best. I wrote down and then I didn't put what number it was, but anyways, so Jenny is a family therapist and cpa. She operates a private practice in Pennsylvania and helps small business owners like therapists, coaches and others understand accounting, tax and financial matters. She also owns Simple Profit and Jenny's been getting a ton of questions and she's serving the audiences as best she can. And we're also going to put a link to her blog where she answers many of your questions so you can access that as well. So without further ado, Jenny, thank you for joining us.

[A]

Thank you both so much for having me. I'm happy to just be able to just give another format for people to understand some information of what's going on because we're overwhelmed by being in the middle of a pandemic and then we're thrown this difficult, difficult situation of having possibly financial issues and the solution, but we don't really know what solution is going to be best for us. So I thought it would be good to give a little bit of an overview of what the options are and then a little bit of information to help make the decision. And one of the things that's most important is no, we are not in a good environment to be making decisions, but we need to make them. And when we are in that situation, we need to just be kind to ourselves and say, if I regret my decision later, I'm going to say I did my best. And your best is going to be reading the information that's available, thinking pretty hard about what your situation is, trying to guess what you think your situation is going to be in six weeks, and then saying what seems like the best to me. And if you can do that, you're probably going to be able to live with your decision, but it's just, it's just difficult right now. So I want to give a little bit of the overview and part of the overview is thinking about what is your business. So it doesn't particularly matter if you're self employed, if you're a sole proprietor, if you're an LLC and S Corp, all those forms of business can take advantage of any of the options that I'm going to discuss. But the one hangup that is very difficult for people is when they employ independent contractors. Because if you employ independent contractors, you might think of them as the same, as employees, but they're very different from the government's perspective. They're not at all the same. And your independent contractors are business owners just like you, which means they can take advantage of these programs as easily. And there's a lot of confusion over should I get a loan to cover my payroll and what I pay my independent contractors. And what I'm going to suggest to people, I don't make a lot of of this is what you should do because I don't should very much. But this is an area, I'm going to say there's a should here because sometimes the taxes, there's a should and there's a should here. If you attempt, even if your bank says hey, give us your 10, the 1099 you've paid your independent contractors, we're going to roll that into what we're going to loan you. You could run into a problem by treating your independent contractors as you would employees. And so keep in mind as you're going through this, you might need to do a little bit of a mental shift if you have been thinking of yourself as an employee, as you're an independent contractor, but you think of yourself as they're my, that's who I work for. Or if you employ independent contractors, you need to be thinking that they are just like you, they're in the same exact boat with access to the same information. And if you try to take care of them, take care of them by sharing information, take care of them by being helpful and supportive, don't take care of them financially because they need to take care of themselves financially, they're independent.

[C]

So Jenny, what you're, yeah.

[B]

What you're saying is so self employed business owners who have a different entity and 1099s are all, it's like the same opportunity. So we can't like a double dip if you will. And so for those of you guys who are watching the video and you keep seeing Kate, like, who is she chatting with? How rude. Kate's actually chatting with you guys on Facebook. So if you keep seeing her looking down and being on the phone, she's attending to your guys needs because, you know, when it comes to tech, we have to make other arrangements.

[C]

I just want to say, yes, I see about 50 of you who are commenting on this Facebook thread. Everybody is trying to get in. And I have to say, you guys are giving us such good love. You got all these fun images of like good juju and all these good vibes of trying to get the tech gods to be in our favor. But Facebook is just disappointing us right now and it's crashing along with a lot of other platforms. It's okay. We're rolling with it and we want to be able to provide the information for you guys. So I am woman in the chat. I am responding to all of you guys and so that's why I'm looking at my phone the whole time here.

[B]

So Jenny and I will keep going with it.

[C]

Yes, we're going to keep going with it, ladies.

[A]

And this is great because we want to be able to answer people's questions even though the technology wasn't in our favor this morning, this afternoon, depending on where you are located.

[B]

So I love that you say, Jenny, the best thing that we can do is share information. And thank you for clearing that up for myself because I had that question. I did fill out my SBA.gov this morning and then I'm like, how many employees do I have? I'm not sure. It says 1099. So thanks for clearing that up. That was really helpful.

[A]

Yeah, it's very confusing because it can be a gray area. It's not a gray area from the government's perspective, but when we're just operating, doing our normal thing, it becomes a gray area. So you want to be really clear right now on that one issue. So I'm going to give a little bit of an overview and then, you know, we'll just answer questions as they come. So there's three basic options that we have right now. If you are impacted, now, if you're not impacted, if you have the type of private practice that you're not seeing a decrease in clients, then you don't need to do anything right now. This is really. Programs are available for people who are impacted and there are a lot of clinicians who are seeing 50% of their clients right now. We did this herculean effort to get I Don't know. I would think maybe 95% of us online doing telehealth, which was amazing. I think when I see some of the other industries trying to do, I think we did a really good job. But then, okay, I'm ready to go, and half my clients are ready to show up because they're just dealing with so much. So if you're impacted, then these options are for you. So I'm going to talk about three unemployment, the economic disaster loans, which comes with a grant, and the ppl PPP loans, which are paycheck protection program loans. Now, one of the things I've noticed talking to therapists is that we tend to not want to take on debt, which is great. That's a wonderful thing, because even if we have a lot of student loan debt or mortgage, we know intuitive, you do not need debt to run a private practice. You don't need debt to grow a private practice. We have a really awesome business model that doesn't require debt, and we don't want to go into debt over this if we can avoid it. But all three of these are appealing because they don't necessarily put you in debt, even though the word loan is attached to them. So if you're worried and nervous about the idea of taking on a loan, I'm going to explain how you can take on a loan and not end up in debt. Also, if you're nervous or worried about trusting the government's programs, I fully respect that. But all of these are government programs, and so you're going to take the lesser of the evils, of the ones that you feel the most, that you can feel most comfortable with.

[B]

I'm glad that you mentioned that, because even the webinars that I've been on and things like that, there was this hesitancy for me to be like, this is too good to be true. When is the government giving free stuff and really helping out? You know what I mean? So that mindset shift is definitely hard, but definitely understanding and reading the information.

[A]

And how many mindsets. Mindset shifts are we all going through right now? Right. That other part's true too. But how many mindset shifts are we happening all at once? Like, even the way we grocery shop, we're having to go through a mindset shift on that. That's a tongue twister.

[B]

I get sad, like, thinking about, like, I don't think we've ever really thought. I mean, as therapists, we probably think about, like, touch and touching our clients and shaking hands or giving a hug. But, like, in Our whole world, we've never really had to think about touching or not touching. I mean, not touching anything right now. And it's just sad because we're such a. We're tribal people or relational people. And it just, that, that's, that's sad to me.

[A]

You know, I went grocery shopping and it was, it was just a completely different experience. And it was like the Twilight Zone. And I'm. And I was getting sad. I was standing in this incredibly long line, six feet apart from everyone else. And I was just sad because I like, this is, this is just so, I want to. Where was I? So, unemployment. So okay, so I'm going to dive in. Unemployment. Oh, wait, no. I'm going to address something you just said. The gut, gut check of how is this real? How is this real? And then I'll do the overview. You know, they're giving $600 extra a week to every single unemployed person. That's $2,400 a month. Even if you were waiting tables or busing tables or you had, you know, you work in Pennsylvania where our minimum wage is still 7.25. Even teenagers don't make that. But like it doesn't matter, you're getting an extra $600 a week. So when the government does something like that and they say every single person, we don't care, you're getting an extra $2,400. If you're unemployed because of this, then giving an extra $10,000 or $20,000 to a business makes sense. It's proportional. Because we're giving families $3,000. We're giving people who are unemployed $2,400 a month. Like this is proportional. The money that we're talking about, it's not like too good to be true. It's actually in line with. All the programs are in line with each other. Unemployment. There's two things. There's a couple things about unemployment. One is the CARES act expanded unemployment to self employed individuals, which is crazy because we don't pay into self employment. When was the government ever do that? You don't pay in and you get a benefit.

[B]

Ex.

[A]

Again, twilight zone. So they expanded to self employed individuals. So owners of sole proprietors and LLCs, even if you haven't paid in, you're eligible. But some of the states have this thing called partial unemployment, which means you can still be working, but you could be working reduced hours, reduced income and still get some unemployment to sort of catch you up and make you okay. And so on my resource page, which I know you're going to have linked below when this post is a list of states under the unemployment section, a list of states that have partial unemployment. The federal government is encouraging states that don't have partial unemployment to expand it. So what that means is if you have partial unemployment, if you don't have it, you have to be fully unemployed to qualify. So what this means is if you're going to evaluate whether unemployment is appropriate for you, you're going to need to look at your state unemployment website and guess what? It's not updated. It may be updated in the next week or so, but if you can imagine a government system that is used to being same year after year, very bureaucratic in a week's time, updating their forms, updating their website, updating their processes, rethinking how they handle stuff, it's a huge undertaking. So if you think unemployment might be for you, find your unemployment website. It's linked on my resource page all the states. And keep checking it, check it daily if you want, just to see. Because they will post the updates right on the front. They want everyone to see them. So partial unemployment is helpful for you if you're still working some. I've talked to some.

[B]

How does that, Jenny, how does that work? So if you like an LLC or whatever and like half your caseload went down, you're saying you have to like have like no clients.

[A]

Is that if you're in a state that has no partial unemployment, okay, then you have to be completely unemployed. Like all your cases would have had to have dried up and you're stopped, which has happened to some therapists.

[B]

Okay. Now if you have.

[A]

Yeah, if you have a job, right.

[B]

And maybe you're doing private practice part time and you don't have any clients in your private practice, but you still have your job and your job paying you, how does that.

[A]

Then you're probably not going to qualify for unemployment because you're still getting paid. You know, one of the benefits of our business model is you can start a private practice while you're still fully employed, but it means you're working a job and a half and the unemployment isn't going to compensate you for having a job and a half and you lost the half, they're only going to compensate you for your main job. So if you're working a job and a half, more power to you. But you're only going to get compensated if you're, if you're working. If you're not able to work full time, like half time.

[B]

So what if I'm Just I'm thinking some of our therapists do have their private practice but also kind of do some side hustles and have a part time job. So how would, where would they go for the benefit?

[A]

So this is where it's going to be a little bit dependent on your state rules. What's going to happen? Because this has never happened before this, your state is going to have some guidelines. You will qualify for self employed, partial unemployment if. And then you're going to have to see if you meet those criteria because it is very likely that you had three gigs and you're down 50% of your income and you're going to be able to show them, I'm making half and I'm working half and you're going to qualify. But every state's different, so there's no way to make a general statement. The main thing is if you think unemployment's free, you're gonna have to see what their criteria is for your state and keep posted on it because it's not out there yet. It's being in some flux.

[B]

Gotcha.

[A]

The thing about unemployment that's a positive is that if you, if you decide unemployment is going to work for you, it's going to fill in the gaps in your missing income, it's going to continue likely through this pandemic. So it's going to carry on. They'll just keep extending the additional benefits if we're all still having to stay at home so much. Whereas some of these other programs are designed to get you through roughly like a one time payment or two months. And then they'll have to do another package of something if it goes on. So that's one of the things to think about. Now if unemployment isn't going to, you know, qualify or it's not anywhere going to come anywhere near to meeting your financial needs right now, then you're going to say that's not an option for me. And you're going to look at these other two options.

[B]

Cool.

[A]

All right, Any questions from the group that we're seeing on unemployment? And if not, I'm going to talk about disaster loans.

[B]

Okay, now we can't hear you.

[C]

Oh, there we go. I don't have the questions organized in any particular order. I'm just taking pictures of them, screenshots as they come in. So do you want to wait till the end? You want me to start asking some of the questions now?

[A]

Yeah, because then you can have them a little more. Okay. So the disaster loans. So the Small Business Administration has always had this disaster Loan program. And it's usually used when there's a flood or hurricane or tornado and some, you know, several counties are decimated. And what this disaster loan does is it allows businesses to apply for a disaster loan. And the word loan is a little misleading because there's this thing called an advance that comes with the loan. And most of the therapists I've listened to and talked to, they don't want the loan, but they're very happy to have a grant that will help them get them through. So what happens is this disaster loan used to be like a two hour ordeal to apply for it. And it required a lot of specific accounting information. And accountants charged, you know, decent amount to apply for these loans. They have streamlined this to three simple pages asking barely nothing. So you do not need to pay anyone to do this loan application for you. If someone's saying I'm going to charge you $800, they're talking about the application we had two weeks ago and into the past. This is something you can complete on your own. Now if you, if your accountant wants to give you some information, some guidance, some help, that's great, but it shouldn't be a very costly service.

[B]

One thing, Jenny, I just want to say, like, you know, I think now more than ever it's really important to lean on your team. And your team can be your accountant, your cpa, your banker. We have personal relationship with our banker. And I was able to call like he literally emailed me because they said that the site was going to go up at midnight, you know, today. And he emailed me five minutes before when he's like one o' clock and, and I just can't say how important that is. So like, you know, if you do have a great accountant, send them a box of chocolates, buy them some pizza, tell them how much you appreciate them because this is the time to, to use your team for sure that they're going to help and guide you the best.

[A]

Yeah, and I completely agree. And if you don't have a good business support network, then once we're all through this, we're going to be talking about developing your business support network and saving for business expenses. And that's something we're going to do after. So don't worry if you haven't done that yet, you can do it in the future and it will be positive coming out of a disaster. I also want to add that there's a lot of accountants that aren't fully up to speed on what these offer. There is a lot of Confusing information. And if your accountant has been busy doing taxes the last two weeks, they're going to be just as lost as you are. And one of the things I've been doing is also talking to and sharing resources with other tax professionals because they're also lost. And I've been spending like every single day working on this. And I don't. There's still things I don't know. There's still confusing information. But just check in if you think that you're a tax professional is a little bit confused. Give them a little bit of time to catch up. That's okay. Yeah, yeah. Because they have another job too. That's not.

[B]

Yes, exactly. It's all, all this stuff. It's funny, like at first I was thinking like how, like how cool we're gonna get all this, you know, all these, you know, cleaning out closets. And I think most of us have been busier than we've ever been for sure.

[A]

And it's. Yeah. Your banker is a really good source for information. If you don't have a banking relationship. I have a link on my resource page for banks that are saying they'll work with non customers. If you've just had a. That's separate that you've been using for business. We never anticipated that this would be important for the reason it's important now. But that banking relationship and being viewed as a business client by your bank is really important right now. And we'll get to that when I talk about the PPP loans. But for the disaster loans, it doesn't go through your bank. So on the SBA website you have to click around a little bit. But there is a Covid resources and you just keep looking for the thing that says apply here and it will say disaster loans for right at the top. And it's not going to ask you too much information, which is going to be unsettling for some people, especially therapists who were very. Seem to be a very conscientious group. And we're gonna be like, it didn't seem to ask me enough questions. But a couple things that come up. A lot of people went for a lot of people when they're filling out the disaster loan application is it's only going to ask you for gross revenue. So that's the revenue that you deposit in the bank. And if you're a 1099 contractor, that's the same amount that would be on your 1099. It's what you get. It's the cash you collect from clients from insurances or on 1099. And that's what is asking for gross revenue versus net revenue would be that gross revenue less your business expenses. So the disaster loan specifically looks at gross revenue, and then it has this line for cost of goods sold. And this one's tripping a lot of people up. Because we don't have cost of goods sold. And because we're such a conscientious group, we think what's asking us, we should have that information and we should be supplying it. No, a cost of goods sold is a material that goes into something. So if I, if I sell this pen, my cost of goods sold are the plastic and the metal and the ink, and it's the, it's the materials that go into the thing that I then create something with and sell. And it's a specific type of expense. Nowhere on this application does it ask for overhead. So even people who are making pens are not supplying their rent or their education or their interest costs or any of those things. So when it asks for cost of goods sold, unless you're selling some product, like you sell books, you sell videos, you sell essential oils, you do not have cost of goods sold. If you're not making something, you don't have cost of goods sold. So that will be zero.

[B]

And then, and then SBA small, like as in small business administration.gov. so if you're trying to find dot com, that's not the one.

[A]

So it's, sorry, sba.gov@ the top. It will say Covid disaster. Click there. And then there's going to be a bunch of different information. And just keep looking for the thing that says apply here. It's used to be really big at the top and now it's like buried down, but you'll find it.

[B]

I actually did fill that out this morning, and it was very easy to fill out other information. You probably will go over that, right? Other information you need is like when you established your business, like you said, total revenue, the address of your business. It's not, it's not too much information, guys.

[A]

Sometimes for some people, it's a little bit unsettling to too little information. But you brought up the point of when did your business start? And this is another thing that's confusing for people is that for this disaster loan, you need to have been in business in January 31st. And there's a reason why this. Because when there's a hurricane or a tornado or flood, people will rush into the area and say, oh, I was in business. Give me $10,000. And really what they're really trying to do is focus on people who were impacted, who already were established and impacted by the disaster. So although there's legitimate therapists who are like I was in the process of establishing and now I have rent that I have to pay and I don't have, I can't open my doors, you are absolutely impacted. But if you were not in business on January 31, this loan is not going to be an option for you. Just because they're trying to prot. Against. They have this rule that protects against people taking advantage. That doesn't mean that you're not going to be eligible for the unemployment option.

[C]

I have a question here that relates to this, so let's go ahead and pop that in. It's from Andrea Connell and Andrea says hi question. If you don't have your LLC as of yet but have a practice, does this still apply?

[A]

Yes.

[C]

Okay.

[A]

Absolutely. Andrea. It doesn't matter what your form of business is. So the four main, four, five, really five main forms of business would be sole proprietor, partnership, llc, single member LLC or multi member llc. And then you have S Corps and C Corps. So that's like six. All forms of business are eligible for this. And sometimes people are a little bit confused like well, I didn't. Somebody asked actually in my group earlier, I didn't establish myself as a sole proprietor. I didn't register. Usually you don't. Usually sole proprietor means did not register anywhere, just started working and they're going to ask if you do the PPP loan. We'll talk about in a minute. They might ask you some additional information to establish that you were an existing business. But you'll be able to do that because you have deposits and you have expenses and you'll have receipts and you'll have things that you can show to prove that you had a business. So yes, you are definitely eligible.

[C]

Another question is from Stanford. Lisa Robin Sanford says are we eligible for a loan if we just open practice in January of 2020? You just answered that. And do not have revenue to show for the prior 12 months. And if the practicing clinician is only employee as a sole proprietor. I just got my practice up and running with an EIN website, blah blah blah. She wants to know if the CARES act will help. She's afraid of closing and going bankrupt.

[A]

It's a very legitimate concern. It's a difficult time to. If you started, if you started a side private practice and had your regular job, you have more options. But if you, if you're starting your site, if you just Started your private practice and it was your only gig. It's very frustrating. So you need to have been in business for the SBA loan, the disaster loan, and as of January 30, and they do ask your gross revenue. So if that number is zero, then they might not approve your loan. And we don't know yet if you'll get the grant. I think it's worth trying. If you weren't in business at January 31st, this is not. You're not eligible at all. But if you were in business and you just didn't have any revenue, I don't know that it's wrong to just go try because you've definitely been impacted. There are questions that they ask on the application and you need to answer all of those truths. And if you can't answer them truthfully, then you might not be eligible. But look at the application, see if it applies to you and give it a shot because we don't really know. The CARES act is also the act that gave us the $1200 per adult and $500 per child that's coming some point as soon as they figure that out. And the expanded unemployment benefits. So both of those are available to you even if you don't qualify for the. These other two things I'm talking about.

[B]

So good news, Jenny. Actually, one of our friends had texted that they actually got the twelve hundred dollars already.

[A]

So that's awesome. They must have had updated banking information. And this is. I'll just throw this in the middle just because it came up. The IRS has said if you don't have banking information on file with them, if you hadn't paid or gotten a refund by using your electronic funds, that they are going to have a portal for you to update your banking information. That's great. Yes.

[B]

Do you know that portal? Can we put that.

[A]

It's on my resource page. I don't know off the top of my head. And it's actually. No, it doesn't exist yet. I have a link to the IRS saying that they're going to create it.

[B]

Got it. So, guys, all this information that you're listening to, if you have questions, don't bug Jenny through email. Definitely go to that link because she's been such a great resource. And we actually have that on our resources page linking back to Jenny. So don't worry about it. We got you guys covered.

[A]

There's one more thing about the Advanced Disaster Loan grant that is really important is that is when you get to the last page, asks you to put in Your banking information. And right above that it says, do you want an advance? And you want to click that button. Because what that does is, it's not necessarily clear, but what it says is. And they should say this. Would you like us to give you $10,000, no questions asked? And that's the part that wants to throw us a little bit, because it. But click the button anyway. It might be that if your revenues are below a certain amount or if your business was super new, that maybe you don't qualify, but maybe you do. And so click the button. And that's really important.

[B]

You know, I'm just gonna say this because it might be out there for other people. It's very interesting because I'm having like my own money talk conversations, right? Like, and some of them are like, well, maybe more people need this than me. And free money. How can I just receive free money? So if you're having some stuff come up, this is a good time to begin to look at your own money conversations and your relationship to. And clear that. Like, it was very weird for me to click that button. Like, yes, please. Like the deservability, you know. And I know that therapists struggle a lot with money stuff. So I'm just adding that in there because there's another dynamic that's happening through this time. So I have.

[A]

And I have a reframe for you. I have a reframe for this. I have a reframe that you can use. And the reframe is that the entire process that's been set up here, the unemployment, the disaster grants loans, and the PPP loans that we'll talk about next are designed to get money to people in various channels. Because if we all only had unemployment as our option, they're already going to be so overwhelmed and the systems are going to crash and they have to reinvent by saying, some people are going to go to unemployment, some people are going to go through the SBA and some people are going to go through their bank. They have spread the resources around and you get the money anyway. If you went unemployment for three months, you're going to even, maybe even two months, you're probably going to get that much money if. Depending on what you were making before. Before. So that $10,000 sounds like a lot, but it might not be compared to what you were going to do anyway. So they're trying to get everyone okay. We want to be fed, housed and as safe as possible right now. And strangely, our government seems to be acting, understanding that we haven't had to Convince them. Now getting the money in our hands is a little bit of a challenge and their processes are really messed up. But. And it's going to take time. But the idea here is we cannot have this many people stop working and not be able to survive. This is not a choice here. So that's really important. It's okay. You are going to get the money one way or the other.

[B]

Good question, Jenny. So for those people who maybe this is like their first time in business or they haven't gone through a full year and a lot of times we don't know what to offer, organize or what to track or how to track, what information should they be getting together and what are some resources that you recommend so they can get this organized so they know what to communicate when.

[A]

Yeah. So the main thing for a self employed individual is going to be a profit and loss statement. And if you don't know what a profit and loss statement is, it is a statement for a period of time like for 2019 or for January and February that lists your revenues. So the money you got from clients, Insurance Co pays, 1099 work, anything, it was money you earned less your business expenses. The business expenses are listed out. If you have been in business for a while you can go to your last filed tax return. And if you are a sole proprietor LLC, go to Schedule C, it'll be in with your 1040. And if you are an S corp, you go to your 1120s and both of those are going to list your revenues and your expenses and that can give you a sense of what it looks like. So if your tax form was 2018 and now you need to figure out 2019, it's the same information you gave your tax person or used to file your taxes. It's what you're taxed on. And when we talk about what, what, what you earned and what you have, your, your, that is the statement that shows you the net income from your business operations. So profit and loss revenue, less expenses gives you your net earnings from business. When you apply for this SBA loan, you're just going to use that revenue line. So you need the statement for either one. When we get to the next one, which we'll switch to next, you're also going to need some other information like your payroll reports. So if you have any employees or you're an S corp owner, you're also going to need your payroll reports. If you're an independent contractor, your 1099s that you've received and your bank will also. I'm going to just switch now and talk to the PPP loans. Your bank will also give you a list of information that you need. So the. And I don't know if there's any hot button questions on the disaster loans before we move to the next section.

[C]

It's hard to tell what questions are related to which category. There's a lot of questions though, so I'm just going to go to the end.

[A]

Okay.

[C]

Yeah.

[B]

One question I do have, Jenny, is the question about do you have employees? Now if you are an employee of your company, right. You get a W2, you say yes.

[A]

Is that one you have one employee. If it's just you, I feel so.

[B]

Validated by you today. Thank you. I did it right, Right.

[A]

Yes. You are an employee. An S Corp owner is both an employee and an owner. You have sort of two hats that you wear and you pay yourself a reasonable salary based on the work that you're doing. And then you also have profit. So the paycheck protection program is I think of it, it's just another way to give businesses money and it's, you know, so when you're evaluating these options, you're going to look and say, well, what's going to happen if I go this path? What's going to happen if I go this path? What's going to happen if I go this path? And then you're going to decide all the while considering what your needs are. The paycheck protection is a loan. It starts off as a loan and is potentially fully forgivable if you use the money as instructed. And rather than. So let me just for comparison purposes, the disaster loan doesn't tell you how much. You don't say, I'd like the $10,000 grant plus an extra two. It just, it says we're going to give you 10,000. If you, you know, if we process this, you'll get 10,000 and then we just wait and see what they give us. We're not asking for a certain amount. By contrast, the PPP loan, you are going to ask for a certain amount and you have to calc it. And that calculation is a function of payroll costs. Even though you can use it for your rent. The loan amount is just a function of payroll costs. And for this one instance, because payroll Costs usually means W2 employees but for this one application, for this one program they have expanded that to include self employment income. So payroll costs. And this is linked on. There's a, there's a borrowers guide from the treasury on my resource page under PPP loans And this is, I'll just say what's detailed there. There's four things that count as payroll costs. Your payroll costs to your employees, what's on your gusto statements, for example, though those reports, that's your payroll costs for you and your employees. If you're employee, then there's also benefits which might also be on your payroll reports, but there could be some other benefits that aren't including things like sick pay and vacation pay if you offer those benefits, including health insurance. The third one is payroll taxes, so that will also be on your payroll statements. And then the fourth one is income from self employment, which is where you're going to look at your profit and loss statement. To get that, once you've determined what your payroll cost, you need to look at what period. And this is for me as an using my accountant hat, very frustrating because one document that we have, which is a small Business Guide, Small Business Owners Guide, says you're going to use the period of this certain early period in 2019 to determine your payroll costs. But the actual application, they have updated and said if you were in business in 2019, you're going to use 2019 payroll costs and then you're going to average them. So that's just the total for 2019 divided by 12 will give you a monthly average. A very common question for people is, what if I just recently hired three new therapists and my payroll costs are now this and they were the one. You might not be able to get the payroll covered for the new employees. That could be one option. The second one is talk to your banker because they're the ones who are approving these loans and they're the ones that are going to forgive the loans. So ask them, explain the situation to them and see what is possible. But some of this is up in the air and that's why there are certain banks that have their applications up right now and certain banks that don't have their applications because some of them are saying we're not sure yet how some of this stuff will be handled. The application, which is also on my research page under the PP Loan section, the app that takes you to the Treasury's website of an application. And I have it, I won't pull it out. This application is a paper application. You're going to apply through your bank if you want the PPP loan. They've put this out so that everyone has the same information. Because if you have the same information, then you can like, okay, like we want to be consistent here on this. It says if you're a new business, you are going to use your average payroll cost from January 1st to February 29th. So if you just started in January, you can take January, February. Now, if you started January 20th, your average for that period is going to be the total divided by two months. And it's going to be pretty small, which might lead you to believe this loan option is not going to be an ideal one for you. Maybe the $10,000 grant will be better. Maybe having everyone go on unemployment is better or partial unemployment. So you have to look at. And this is where it is so hard to make a decision because you're like. And people ask me, jenny, which one should I do? There are so many factors. I would not be a good person to decide that for you. And it is very easy because we're good therapists, we know how to do that. And we don't all know how to be business owners. And you might not have a business owner hat to put on right now to make this decision, but I want people to just consider that you're the one who manages this business. You're the one that brings in the revenue, you're the one that pays the bills. You're the one that's made this entire machine work for your private practice. And you can do this. If you sit down and write it out and say, this is what this path looks like for me. This is what this path looks like for me. This is what the PP loan looks like it would give me. This is what the calculation is. And if you calculate what you might get under the PPP loan and it's less than the $10,000 grant, go with the $10,000 grant. And if later you decide that's not, you can apply for a PPP loan. If they're still available, you can convert it. There's some other options that you can use to try to make it through. You're just going to make your bed's best decision right now, knowing that you are empowered as the business owner to decide what's going to happen with your business.

[B]

Jenny, just go over the payroll cost again.

[A]

So what so confusing. It's so. It's so much information. If your head hurts watching this, this is so much information. The payroll costs or the, the actual payroll, like salaries, commissions, bonuses, whatever, things like that, it has to be capped at $100,000. If you have employees or yourself are paying yourself over $100,000, the government said, like, we're trying to help everyone out, but we're not trying to make you cash up your six figures. Anything that's over 100,000, you just forget that up to 100,000. So payroll costs, what you actually paid in salaries and wages, the benefits we've paid for sick time and vacation time and health insurance benefits and the payroll taxes. So your portion, the business's portion of payroll taxes and for self employed, your net earnings from your business. So if you sit down and you have a piece of paper and you write down those four things and you go to the treasury link on my website for borrower, borrower information, it has all four of those listed. Write what the number is for each one. Get your payroll reports, write the numbers down, get your profit and loss. And if you don't have it, use your bank statement, use your 1099 and write that number down. You add those up and you multiply it by 10, 250% or 2.5. You multiply it by 2.5. And so let's say your average monthly number is $10,000. Your loan amount is going to be $25,000 because it's going to be $10,000 times 2.5. And that's the only thing that you're going to use to base the loan on is your payroll costs. But then they say you can use it for four things. You can use it for payroll cost, you can use it for your office rent, you can use it for an office building mortgage and interest or utilities for your office space. Only those four things, not training, not credit card fees, nothing else, those four things. And you have to use 75% of it on payroll costs or more. And you can't use more than 25% on other things. So if I just do the math really quick because it's so overwhelming. Let's say my monthly payroll was $10,000, right? So $10,000, I times that times 2.5. That's my loan amount. That's what's going to go in that box. 1. And then now I need to know how to spend it in a way that's going to cause this to be forgivable because we don't want to go into debt. We're only looking at this option because we're going to get it forgiven if we use it appropriately. And that's okay because we're going to keep our employees off unemployment too.

[B]

So if I'm explaining what that word forgiven means.

[A]

So we're all here, let me finish my math and then I'm going to explain forgiven. So if I times, at times point to, if I get a $25,000 loan. I have to use 18,007, 50 on payroll costs or more and the remainder can go to my rent. So if your ratio of payroll costs to rent an office space is 75, 25 or in that 80, 20, this might be a really good option because you're, they're going to encourage you to use the bulk of it for people employment to keep them afloat. So forgiven. So this starts out of a loan potentially forgiven. And what that means is that they will say you don't really have to pay it back. Right? This is like, okay, I know, but.

[B]

Again, I just wanted to make sure that was clear.

[A]

If they didn't do this, we'd all go get unemployment and we wouldn't have to pay it back. So it's in line with that. But I want you to think about if your grandmother gave you money and said you can, you can keep it if you use it for college and if you go buy a car, she says to you, I really think you need to pay me back because I gave it to you with the intention to use it for education. And if you gave user for education, she says, I'm so happy you can don't have to pay me back. That's what this is. They want you to use it to keep people employed because they don't want people to go to unemployment. They know a lot of people are going to need to go to unemployment. And if you need to go to unemployment that's the best choice, then do that because they want, they want you to do that if that's the best choice. But if you can get money to keep your employees employed and yourself paid. Now we've alleviated a little bit of strain on the unemployment system. Well, for the. Basically the same amount of money. Basically the same amount of money. And they've got this, you know, additional benefit of keeping businesses not shuttered open. We might be all sitting around only seeing half our clients, but if we can all get paid the same when this is over, we can go right back to business in our economy. They said, I think 50% of our economy is small businesses. That's us. And if we all close down and we have to cancel our leases and default and fire everybody, then our ability to restart when this is over is really hindered. And that means our economy will not get on its feet as quickly as it could if we all stay in business. So there's a huge value to doing this. So I hope I answered the question about forgiven. How is it forgiven? So this is the Other how is it forgiven? They're going to give you the loan. They're going to look at your records. They're going to say, okay, get the loan. And then when, as we go through this and you spend the money, you're going to give them the documents that prove to them, for example, your payroll reports, your canceled checks from your rent, you're going to give them the information that shows that you 75% for payroll and not more than 25% for rent, mortgage and utilities for your office space. And then they're going to say you're going to let the government know this one isn't coming back. And then the government eats the money, which they're going to do anyway.

[B]

And if I'm correct, if so you pay the 75% and payroll, but you don't have that amount of money to spend and maybe you don't have like a mortgage or your rent is really low, then do you pay that 20, whatever percentage leftover is back?

[A]

Yeah. So if, let's say they say, well, you didn't spend it all the way we wanted, well, guess what, you should sell that money in the bank. You didn't spend it. So if you, if they, if they give you $25,000 and you only had $20,000 worth of payroll and other costs, you should still have $5,000 in the bank and you will not be in debt as long as you only spend it for the intended things. And they'll say, we're forgiving 20%, $20,000. And then you'll say, and here's the other five back, and now I'm not in debt. So that's the way to take a loan and not be in debt. Now there's some nervousness amongst our community of, well, are they really going to forgive it if you have that nervousness? They're very adamant that this is how it's going to work and this is part of your loan document and this is how it should work. If you're nervous about it, then maybe this isn't going to be the option for you because you're going to worry about that versus and compared to the disaster loan grant, the $10,000, it's in bold print on the Small Business Owners Guide lard bold print. You do not have to pay this if they give it to you don't have to pay it back under any circumstances. And if you don't need the loan, you either, you just give the loan money back. And if they have terms, you wait a little bit and then you Give the money back. You do not have to spend loan money.

[B]

It's funny that you say that. I loved your example about grandma because that's exactly what I was thinking. And I also remember when I was in grad school, I'd get sent a check and I knew if I took this check, I'm gonna have to pay interest. So I would just send it right back. So it's important. Just kind of save that and know your numbers. And I know as therapists, we always talk about document, document, document, and some of us have a love hate relationship with that. But now more than ever, especially when it comes to finances, is you had to this great opportunity. I would definitely encourage you to keep really good documentation around that so you can really support yourself and take advantage of what you know is available and given to you and make sure you have the correct information when it does come back around.

[A]

It's such a good point. And one of the best ways you can make sure you have good documentation is have a bank account for your business. When you have a business bank account, because now you'll have the business relationship with your bank. All your records run through there. Everything should run through there. None of your personal stuff other than paying yourself or contributing money to your business. Don't buy your groceries out of there if you've done it in the past. No judgment at all going forward. Business bank account. That's where you deposit your cash receipts for all your receipts from clients, where you pay your business bills and you pay yourself. What's left.

[B]

I love that you say that too, because again, I just. For me, my mindset is often, yes, there's fear and worry and concern and anxiety, but there's such great opportunities. So this is an opportunity for you to get really cleared up, cleaned up on your own systems, and assure that money about your businesses in and out of that account. And that's it. And I love how you say that. No judgment. If you did it, it's okay. You've all done it at some point.

[A]

You're not alone. If you have, you are not alone.

[C]

We're getting a lot of questions over here, so I'm wondering if now is a good time to start asking some of those so you can answer them.

[A]

Okay, Absolutely.

[C]

Perfect. And by the way, thank you so much. This has been such a wealth of information. It's absolutely incredible to have you on Wendy.

[B]

Before you get asked the question. Kate. So for those of you watching this on Facebook, can you in the comment section give Jenni some mad love like tag, Seriously Give her some mad love, lots of emojis, lots of hearts, because she totally deserves it. Because I know anytime that I tag Jenny outside of this crisis, boom, she's on it.

[A]

Boom.

[B]

She's with a resource. And she's a therapist, too, guys. Like, this is not what she does, like, 100% of the time. So.

[A]

Being a therapist, to me, is my calling. I love being a therapist, but, you know, if I was going to give myself a new title, it would be like, I am just. I feel like I have a skill at explaining things. I can take complicated information and put it into an understandable format, and I really kind of enjoy doing that. And. And it's very satisfying to me when someone says, oh, that makes so much sense. No, it's still really confusing. This entire thing is very confusing, and it's not our fault. It's too much too fast, and it's overwhelming. But to the extent we can get an understanding, that's awesome. I get a lot of joy out of that.

[C]

Thank you for sharing your superpower with us.

[B]

Yes.

[A]

I'm wearing my Superman.

[B]

Yeah. Show your Superman.

[A]

Superman shirt. And I put this on because I had a bad morning. I had a bad morning. I was really sad at the grocery store, and then I had bought something that fell off the belt. My husband was in charge of the belt and I was in charge of the bagging, and something fell off the belt that I really wanted. And I'm like, oh, I was so mad because I'm not going back to the grocery store for a week. I was like, anyway, a friend gave this to me because I was part of it. I was part of it was socks and tweezers. But anyways, my friend gave me this shirt because I was part of a group who helped save our school that they wanted. The school district wanted to close down, and I was like a dog with a bone like that on that topic. Like, I am with this topic. This is just me and who I am. And once we saved our school, I got this shirt. So I'm like, we have a ton.

[C]

Of questions, you guys, so let's go ahead and get going. Yep. Okay. Wendy says getting conflicting information on whether hired IC's payroll can. Can be included in the PPP loan. If it cannot be, how do we account for their income as part of net?

[A]

Okay, so the. You're. So There's a lot in that question, but you're not. I'm going to go backwards. You're not going to account for the PPP loan as part of net. You're not giving them your net income, you're giving them your payroll costs. Even if your bank says to include your ICs, I recommend you do not that you encourage your ICs to apply for their own PPP loan or disaster loan or partial unemployment. Because if you include them in there, it does not say so. Someone posted in my group that there was a bank who said, give me the 1099. So there is conflicting information. Give me the 10 and as you've paid your ICs. But the treasury information on what this loan is supposed to cover does not include that. So I do not think it is appropriate to include that. Because later when they go to forgive it, they might say, oh, no, no, you weren't supposed to spend it on that. 75% is supposed to go to you, the owner and your employee. And they are not employees. So that could be one problem is it won't be forgiven. And you don't lose anything by having your IC do their own application. It's not less money. That same number you're not going to include. They are going to include. So there's, it's. They're going to get covered the same. So you don't gain anything by including them and you don't lose anything by not including them. The other reason why you don't want to do it is because later you can get in trouble for treating them like an employee. You can be held to account for back payroll taxes, back unemployment taxes, back to when you started hiring employees. And if you get caught for one employee, they're going to look at all your records and they're going to say, every employee you've ever hired, you owe us that money. I don't know if there's a statute of limitations, but it adds up. And so do not treat your ICs like employees, even if you're bank, because remember, bankers are not accountants. Accountants are not financial planners. Financial planners are not bankers. So your banker might say include it. And they don't necessarily understand the labor laws that are impacted by that, that action. So I just, I wouldn't, I wouldn't do it. And I would help your ICs sit down and have a virtual zoom party of all, filling out your stuff together with your ICs really helpful information.

[C]

Okay. And I'm not sure what Bethany, what option she's referring to, but she says, is there a way to use the funds to offer services at no cost? For example, the frontline health care workers experiencing acute stress.

[A]

If you keep your business afloat As a business owner, you can always offer low cost or no cost services to people on the front lines. You need to think of your business as in the whole picture you is your business suffering. If you're not impacted by this and your revenues aren't down, then you're likely not going to qualify for any of these because you're not impacted. So you can't then go get a disaster loan and, and then created sort of a charitable offering with it if you're not impacted. But if you have capacity, if you can say, I'm just trying to get back to my main number and then you have capacity to see some extra people pro bono or to reduce fate, you can do that as a business owner. You always can do that as a business owner. You want to make sure you're accountable that you aren't getting more free money than you need based on where you were before this started. So that's the measure. Where were you before? Where are you trying to get to? You're not trying to enrich yourself and then go off on your own mission with it, but you can always have your own mission. I hope that answers her question.

[C]

Awesome. Helen and Lindsey have the same version of the question, what's the difference implication between PPP and Eidl for private practice clinician, for a single clinician llc.

[A]

So they said, what's the impact?

[C]

What's the, what's the difference implication between PPP and Eidl?

[A]

So as a sole proprietor, I want to make sure I understand the question. You're eligible for either one. And the implication is that there are amounts based on different things. The Eidl Grant gives you $10,000 in some undetermined loan amount that you might want to give right back. And the PPP loan gives you a percentage of your payroll costs, a multiplier of your payroll costs that you have to use in a specific way in order to not, not pay it back. But let's say, let's take an example. Let's say you're a sole proprietor and your income was not that much and your rent was kind of high because you were still ramping up. Maybe you've been in business since September and you're still in the ramping up phase, getting clients, you're making some money, but your rent's still a pretty big chunk of what then the grant, you can just use the grant on anything business related. You can use that for training, you can use that for all the covering all the expenses versus the PPP loan is very specific. 75% or more to payroll costs. 25, no more than 25% for these three other things. And if your ratios don't work out like that because your rent's larger than what you've been paying yourself, then the Eidl grant loan is going to probably be a better option. So to know the implications and to kind of fully answer that question, I don't know, because you have to write all these down on paper. What's the implication for me of this option, this option and this option? And then look, step back and look at it.

[C]

Awesome.

[B]

Can you apply for both?

[A]

You can apply for both. And there is a specific in the Small Business Guide on my research page. So Small Business Guide. Write that down if you want to go find it later because there's a lot of information. There's two things things. You can apply for both and convert the Eidl loan into a PPP loan. But what they're going to do is they're going to say, you already got 10,000 forgiven. We're not going to forgive 10,000 again. And so there's an implication of that. And you want to really read the section in the Small Business Guide on my research that describes that so that you can understand the impact, because I don't necessarily know all the answers of how that's going to impact you. The other thing is explicitly says you can get both if you're using both for different things. So let's say you got a PPP loan now and you used it to cover yourself for two months, and then you got an Eidl loan grant and it covered you for January. And you can show with your good documentation that you did not use them. You didn't overlap, you didn't enrich yourself by getting money from two places when you only needed one set of one had one set of expenses. So you have to prove to keep both, you have to prove that you use them for separate things. Otherwise you can combine them into a PPE loan. And there is an implication for that. If you want to know more about the implication for that, it's best to ask your banker because they're the ones that are going to be doing the forgiveness and they're in the best position to answer that question in full of what's the impact to you?

[C]

Okay. Awesome. Anna Maria says, I'm an independent contractor but have an S Corp. I use a payroll company. Sometimes I transfer money as well. Can that count? And pay myself as a W2. But I also have an independent contractor that does some bookkeeping for Me, can I add their payroll?

[A]

Don't add the independent contractors payroll. And it's. It's because you want to, right? You want to get some money so that you can pay them. And that's how this works for employees. Get some money, pay your employees. But for independent contractors they need to do their own. But your W2 income and your other distribution as an S Corp account because those are both covered bullet point one and bullet point four on the Treasury's borrower guide. Borrower something Borrow information. It has those two things specifically listed. So your. And if you apply for the PPP loan, your bank is going to approve the application and you're going to give them your information and they're also going to be a person that can answer yes, you have included the correct information on this application.

[C]

Okay. I'm having to sort through questions because there's a lot of questions that are similar that you've kind of touched on already. Here's another one from Cheryl. Cheryl says will it provide funds for covering cost of lease operating expenses for a PLLC private practice. I sublease offices to four others and have already lost one person, a neurofeedback provider who believes only option is leaving office and shutting down her practice.

[A]

So they didn't specify which one which they're looking at. But if you get the $10,000 disaster loan grant you can use it for anything business related. You can just use it as they're not even. You don't have to prove it, you just use it for business. That's the right thing to do. For the PPP loan. You can't. You can use it to pay your office lease, your rent. If you have. If you own the building and you have a mortgage and your subleases are not paying you, you can use this money to pay your rent and you're not going to be stuck because you didn't get money but then you didn't have to earn the money to pay it. So. And it's going to be hard for people who have subleases. Right. Because we're all struggling a little bit with paying for offices that we can't use or only using for wi fi. And so that's a little bit tough but that's why they're giving us this money. So yes, you can absolutely use the PPP loan for your lease to make sure that gets paid.

[C]

Okay, great. I took some screenshots of some of the other pictures that were or some of the other questions that were posted. Terry says can we use the funds for part time employees and still have loan be forgivable.

[A]

Yeah. So one of the things that they look at is they're looking at your average payroll cost. So if you have 10 part time employees versus what five full time employees, it doesn't really matter to forgive it. They're going to look at to see did you keep everyone employed and did you pay them. So if you had 10 part time employees before and you have 10 part time employees after, they say good, you did what we expected you to do. You use the money to keep your people employed and if you do that then it will can be forgiven. And I encourage anyone who is going to apply for anyone is read all of the information available. So there is the small business guide that I referred to which gives an overview of both programs and there is a Treasury Borrowers guide which gives details about the PPP program. If you're thinking about anyone, read the Small Business Owner's Guide. If you're thinking about the PPP loan, read the Borrower's guide because that's going to help you discern what it might mean to you. Because I don't know all the factors that are going to impact you but that is covered in the Borrower's guide.

[B]

I just wanted to say thank you guys for all your questions because I know you have unique situations and there's probably a lot of other people, you know, listening to this, watching this that also have that. So you know, if this is helpful for you guys, go ahead and post a thumbs up or a heart or something so we know that we're, you know, Jenny's answering your questions the best that she can.

[A]

Yeah, it's difficult because there is so much specificity and specificity and sometimes there's a question where this is known and it applies to a lot of people and sometimes they're like we're guessing on that one because complete and clear information. But full time employees is a concept. I just want to finish that one question. Full time employees is a concept of saying how many full time equipment equivalents do I have FTEs. So even if you have part time employees, that's not a hindrance if you have part time employees as long as they're employees.

[C]

Okay, this is a little bit of a longer question. Sarah says, I think I finally understand that although I am an LLC in private practice and then an independent contractor with a separate agency for independent contractor work as an in home therapist, that I should count them together as individual business owner. From what I learned earlier, although the sole proprietor can apply on either date, individual people are best to apply. April 10th my bank had no idea when I called the next confusing there's some confusion is which one do I go to for the PPP or the eidl? I was hoping for something that is forgiven that I do not have to pay back. I am not understanding the explanation about the 10K grant and calculating what I need in private practice. She said not to worry about forgiveness, but I want the forgiveness.

[A]

Yeah. So. And whether something. So a grant in general is something that you, when it's given you're expected not to pay it back. It's a, it's a gift. A grant is another way of saying a gift. So it's automatically forgiven at the start of it. A forgivable loan is something that starts off as a loan and is forgiven later. Like I gave it to you thinking that you might have to pay it back, but now I've decided you don't. So they're equivalent in terms of I don't have to pay them back. It's just that forgivable loan. You have to jump through some hoops to make sure that you don't have to pay it back. The grant is actually has a benefit to it that you from the start it's forgiven. So you could call it a forgivable grant but like a pre forgiven grant. So both of those are forgiven. The other question about if I am a private practitioner and this is confusing for a lot of people people because just the this having a concept of what this means. If you are an independent contractor, you are self employed. If you also then have an office where you see clients, you are a private practice owner. But they're the same thing. We tend to say independent contractor to mean I work at someone else's office space and they pay me a percentage. You're just a private practice owner without your own space. So. So when you're thinking about do I have one business or do I have two businesses? If you have two businesses doing very different things, like you have a business where you have private practice and then you have another one where you do education and to you they're completely separate, we'll treat them like separate businesses. But if you have an office that you rent two days a week where you see your own clients and then you go two other days a week to somebody else's group as an independent contractor, you have two locations. You are a private practice owner who sees clients in two places. You have a one business with two sources of revenue. And it's important when you're doing this to think about it because you do not get to apply for two PPP loans for the same business. And there, if one's a sole proprietor, one's an llc, they're taxed identical. There you do a Schedule C for both, they go on the same form. So going forward, it's a really good idea to have any groups that you work for pay your llc, or if you're an independent contractor with S Corp, pay your S Corp, because you are your business that just happens to be doing independent contracts. So that's the concept I think she's talking about. That's very confusing because if you've been thinking about them as two separate businesses and now you got to apply for one loan and you're trying to figure out your payroll cost, that's a big mindset shift that you have to make to think about it. And if you're going to do the PPP loan, it goes through your bank and your bank is the best resource. Even if they tell you we don't know yet, wait a couple days, they might know in a couple days because it's a little bit unsettling if you're going to your banker knowing they're the expert and they say we don't know, but it's all happens rapidly. Give them a couple of days, sort it out, and they'll probably have the answer. The Eidl loan and grant goes through the SBA.gov website. So SBA.gov for the disaster loan and for the disaster loan, you need to have been in business in January 31st through your bank. For the PPP loan based on payroll costs has to be used for specific things, then it can be forgiven. You have to be in business on February 15th. So that's the two. And keep reading about them. They will seem clear and distinct the more that you read about them.

[C]

Here's another question from Deborah. Deborah says, how do they want us to prove the cost of the obligations if we get the 10k grant money? What is the timeframe that we have to show it is per month or is it for the year, or is it until the virus situation ends?

[A]

The 10k grant for the Eidl loan doesn't have a substantiation thing to it after. I mean, it says to use it for business, so you should use it for business. That's the right thing to do. But it says right on the thing you can. We're going to give you an advanced grant that you can use and you do not have to pay it Back There is no next step with the EIDL grant portion. Now the loan, you're gonna have to have this money. I don't want this money. Take this money back, take away my loan. But for the grant portion you don't have to prove it. The one that you have to prove it for is the PPP loan that goes through your bank based on payroll costs. And that is because they want want to see that you really kept people employed and used it as intended. The disaster loan. Think of the disaster loan more as like when there was a flood or hurricane, they just come in, they just infuse the community with a bunch of cash knowing that if we do that people will recover faster. It's kind of a no questions asked grant. But then still use it for business because it's the right thing to do.

[C]

Okay. Terry says can we use the funds for part time employees and still have the loan be forgivable?

[A]

Yes, as long as our employees.

[C]

Jennifer says, I quit my agency job in January, went full time private practice in the end of January. I've lost about half my clients since lockdowns. I'm a sole proprietor. Should I apply for the PPP loan for payroll, rent and utilities. My payroll only unemployment or both.

[A]

So you should take what your because you just went into business. You should take your January, your January probably be zero revenue and your February renovate revenue and divide it by two because that's going to be your average payroll costs. Average payroll cost times 2.5 and you'll see what your maximum PPP loan will be. And if you go to my resource page and you look under the PPP loan section, look for application. Because looking at the application and just handwriting out on this application what it's going to look will help you have the visual. When you have the visual then you can make more sense of this. So you're going to calculate what. Because you just went into business so you're not. It's like it's going to come up with like half of what you would expect to be making. And that might not be enough, but if you still have some clients, maybe that will be enough. If you look at what you need and what that one's going to give you, you will be able to determine if it's going to be enough and if it's a good option. And then you can also look at the unemployment option, you can look at the grant option and say what's going to make me okay and able to get through the next few months.

[B]

I really like that. Idea about downloading the form so you can write it all out, get all your thoughts organized, all the information and there you'll have it.

[A]

When you need to apply, get a whiteboard. You know if you have a whiteboard somewhere like I have a whiteboard I use for clients and write it down, just put it in front of you. Have the I'm visual. So that would help me.

[B]

But Kate, you're doing a great job of limiting that chat. I'm sure there's a ton of stuff.

[A]

This is a tough situation for everyone.

[C]

Yep, there's a ton of questions here. Let me just go back to my pictures. All right, here's another one. This is from Carlin. Carlin says of the $10,000 advance is received can the owners of the business S corp still take distributions from company profits?

[A]

Yeah, I mean one of the things that you can use this loan from is paying is for. Is paying your yourself. That's one of the things that it's intended. Even though the. Even though the Eidl grant doesn't say we're going to make you prove it, they do say you can use it for all of your business things. And one of your business expenses is paying yourself. And once you pay yourself then you can cover your personal expenses. And this keeps you from needing to go to unemployment. So yes, you can use this for making your business continue to operate as usual as much as possible.

[B]

And I would just like to say like what a great time to have a business. You know what I mean? I know it's a difficult time for many but like the fact that you're more business owners, there's much opportunity here for us. So good job for putting in the work because creating a business is not an easy thing.

[C]

And I think this is our last question. It's a little bit longer of a question. This is from Sarah. Sarah says all the information is great and there is a ton but there needs to be some clarity about what we are and that has been contradicting. At one point I'm told it's unclear and another time I'm told it's something else. So I have no idea when to apply into the website still says it's unclear. Sole Proprietor Small Business vs Independent Contractor Self employed. It says we can be both. I am technically both. I'm in solo private practice that started in January. I'm also an IC with an IC agency 1099 started in the end of February doing in home therapy. I am not sure that even qualifies due to another date that I I'm trying to get to the main gist is long. I'm sorry.

[B]

I think I've been listening well enough that I could say it's the same. Right? You're the same. Because she's an IC and private practice owner.

[A]

Yeah. And here's the thing that's confusing and I want to just like run over to Washington and be like, can you please just put clarity on your forms, for crying out loud. It's confusing enough. I would never have written it the way that they wrote it and makes me really annoyed. What they said was, is that business owners and sole proprietors can apply for the PPP loan on April 3rd. Friday, April 3rd. Now the banks have said we're not ready. Some of us are ready, some of us aren't ready. Some will be ready Monday, but that's the earliest date that a business or sole proprietor could apply.

[B]

Then.

[A]

Then they've asked that individual self employed or independent contractors can apply on April 10th. Well, guess what? If you're a sole proprietor without employees, you're also self employed and maybe you're an independent contractor. So what I think it means, and I'm just, I'll say it, it's a guess, but I think I'm right that what it means is if you have employees, you apply on April 3rd because they want to give the biggest amounts of money the fastest of people who are trying to keep groups afloat. So you might have 10 employees. Well, let's handle the people that have 10 employees or even two employees before we handle the people who are just solo because then we're going to help the most people the fastest. And this is crisis and this is basically like triage. So that's how I'm seeing it. I wish they would have added just a couple of extra words to that. Then said businesses or sole proprietors with employees can apply on April 3. But they did say individual, individual, independent contractors and self employed people can apply on April 10th. So that's how I'm taking it. I can't offer more clarity than is available. And so that's the best I can do is to say this is what I think it means and check with your bank and if your bank says they don't know, check back Monday, check back Tuesday. And I don't know that anyone loses anything by applying on April 3rd because the worst that's going to happen is they're going to say you have to wait, wait till the 10th. So it's, it's not, this isn't a rule where if you don't follow this rule, something bad will happen. This is a rule that says this is we're asking you to self get in this line versus that line. And if you got in the wrong line, maybe they'll tell you to get in the other line and maybe they'll tell you to go ahead. It it's not necessarily a big problem to apply on the third because it's.

[B]

Unclear and just to be clear to Jenny that this is non taxable, it's not income. Right?

[A]

Yeah. So this is. I'm so glad you asked that question because this is a very common question and it hasn't been asked and I forgot to cover it. The PPP loan, the CARES act and everything specifically says that the PPP loan is not taxable. So what happens normally for taxes is that if you get a loan like let's say even somebody gives you, somebody has a loan and you don't pay it back and it gets forgiven, it gets written off, they're never going to collect it. You're supposed to declare that as income because you got money. And if you get a loan, it's not income because you have to pay it back. But once a loan becomes forgiven, it becomes income. The CARES act specifically said that the PPP alone, once they forgive it is not income to your business or to you, it's not income at all. But it raises the question is what's the $10,000 grant? And I have a very fun answer for this one. We don't know yet. How awesome is that? It the tax people's heads want to explode when there's something really important that we need to know. And it's unclear. We don't think it's going to be taxable. If you use it for your business, you're going to have expenses to offset it. Hopefully. But we don't know yet. It's not. There's not a lot. Even though these disaster grants have been around for a long time, I haven't yet found anything that says it's taxable or not taxable. And even if it's taxable, in the past they are already talking about other changes in Congress to include other tax changes. For example, they already gave us the delayed tax deadline. We don't have to file IRS taxes till the, till the 15th of July.

[B]

But then you don't have to pay your estimated until October 15th.

[A]

No, they were going to do October. And so what they've done so far is they've said estimated federal taxes for the first quarter are due July 15th for the second quarter. They're still due June 15th. That is very likely going to change. And they've given us like, you can now donate $300 to a charity and deduct it even though you don't itemize. There are more tax changes likely to come. So these Eidl grants, I can't say they're going to be tax free. There's a decent chance that they'll be tax free.

[B]

Awesome. Do we cover most of it?

[C]

Yeah.

[B]

That was a lot, right?

[C]

I was just scrolling through in all the different channels to make sure that we everybody's questions answered. And at this point we have. So, Jenny, thank you so much for sharing your superpower with us because this is such overwhelming, complex information and everybody's getting mixed messages. You really do have a gift at being able to simplify things. Thank you.

[B]

So, yeah, we so appreciate you being on and we hope that Startup Nation, whether you're watching this on Facebook, whether you listen to a podcast, was really helpful and knowing that this information is going to change and update and there'll be new things that are happening. I know usually we tell you what's new next, but honestly, we don't really know what's next on the podcast because we're changing it ourselves to deliver you guys the most important information. And you know, I just want to acknowledge you guys as therapists because I know a lot of times, you know, our work is really behind the scenes. We don't get to talk about it unless it's with colleagues. But I know you all are doing some awesome and amazing work and I know that you're going to be doing some awesome and amazing work many months and years after this for the impact that is really affecting humanity. So I just want to acknowledge you guys for that. And I just also wanted to acknowledge all of our healthcare workers, all of our people who are there working in public, our accountants, our grocery store folks, our bankers, our transportation people. We appreciate you guys. So as we say at Startup Nation, thank you for allowing us to inspire you guys from startup to mastery. Thank you for joining with us, joining us. However you joined us today, we appreciate you and we'll see you guys back next week. Take care, everybody. Have an awesome, inspired day. Bye bye.

[C]

Thanks for joining us on the private practice startup. Visit theprivatepracticestartup.com for awesome resources, free trainings, attorney approved private practice paperwork, and so much more. Sam.