PPP Rules and Stipulations

If you’re reading this and you know the ins-and-outs of the PPP program in the United States.

What were the rules towards qualifications?
It was for small businesses right?
Did you have to have a certain amount of employees to take part?
Were there any stipulations about businesses having to be a part of an industry direction affected by COVID? (Like personal services) Or could a business have been from any industry?

Also, did I read it right that businesses approved could have their loans forgiven if they could prove they paid 60% or more to payroll?

I’m asking because it’s recently come to light that a lot of exceptionally wealthy influencers, who’s businesses exist only on social media, managed to take PPP Loans last year. Did they discover a legal loophole in the system?

Influencers often set up LLC’s for their YouTube channels and Instagram pages as a means to be able to write off expenses – like clothes shopping – as business expenses. If they’re the sole employee of their LLC, technically speaking they could have taken the $50,000 they got in PPP, paid themselves as their only employee, and the loan will be completely forgiven because they paid payroll with it. Or could they potentially have to pay it back?

Essentially, for Influencers (people who make 6 and 7 figures already and exist in a digital sphere that wasn’t affected by COVID at all), the PPP was just free money in their pocket?

I’m just really curious about how this system worked. If they made $800,000 in 2019 and their income stayed the same, or grew in 2020 thanks to the pandemic, would they have to pay it back?

Thanks to anyone who’s able to help with clarification!

13 thoughts on “PPP Rules and Stipulations

  1. The rules were vague, and at the end of the day, it was up to a particular bank to decide whether to give a loan or not. That’s why there were so many cases when the companies which SHOULD NOT have gotten the PPP loan would get it, and others that should, won’t.

    Our CEO was trying for months with no luck (because people who do not know our business think we are a bloody business and predatory sharks). And then we found one bank in Wisconsin which said: yes, sure. And that’s how we were able to reinstate everybody’s salaries.

    Liked by 4 people

      1. yes, and then they ran out of money fast, and then there was one more round. But the most important thing is that the final decision was made by the banks.

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  2. This seems like exactly the type of shifty shit those (completely non-) hardworking influencers would pull. Then again, my opinion of their something-for-nothing lifestyle of rewards is pretty low, so maybe (definitely) that colors my opinion.
    But let me tell you what *I* know of the situation…situationally.
    I know that the first two rounds of PPP were basically a clusterfuck for various administrative pains and corporately exploited loopholes. As a “gig worker” with Lyft, there was very little fanfare in my communication pipeline. Maybe a mention or two over the entirety of last year. I would imagine influencers were about the same. However, it’s likely that without the support of a network like Lyft to mention it it may not have even been on their radar and likely still isn’t, so I bet the scenario you described likely didn’t happen. At least not on any large scale.
    Now, this past round that McTurtle finally allowed to a Senate vote for approval seems different. For whatever reason, Lyft has been very vocal about driver eligibility. It might be strictly to provide support/assistance to their drivers, or it could be that the server – BlueVine, I think it’s called – paid to have the messages put out to the drivers.
    Who knows?
    But after the third message in ~10 days, I figured I’d read it.
    Then I clicked through to see if I qualified.
    Eek!
    Don’t worry, I’m not planning on switching political affiliation to the increasingly shifty GOP, I was just curious.
    Surprisingly, I was eligible.
    I mean, I was shocked…especially since I didn’t claim any lost revenue. If anything, I earned *more* driving last year than in 2019. Yet, there it was, a $6500 loan on my $50k driving revenue.
    The stipulations were a 10 month deferral and a 1% interest rate – but it didn’t have anything in the approval about the debt forgiveness you mentioned – which had been a big part of the first PPP and its renewal. I know that the threshold for actual payroll protections changed with this version, allowing the funds to be used on different supplies/improvements for the business – presumably to allow businesses to build out and improve their outdoor operations. But maybe that means there’s no forgiveness this time? Even though I was approved and submitted the required docs for electronic review versus having to meet in person, I still haven’t been notified of final approval or fund availability. I’ll try and remember to keep you looped in on what happens there.
    Something you’ll find interesting that I discovered during the application process were a few of the qualifying questions. Many seemed skewed toward closing the loopholes that corporations exploited the first time around – like nationwide chains getting loans for a single location because it had “fewer than XX employees”, even though the parent company far exceeded that number.
    But I shit you not, one of the questions was “Are you the President of the United States?”!!!! 😹

    Liked by 4 people

  3. So I don’t understand all of the nuts and bolts of this issue, but some of the best explanations of these policy issues that I have heard come from the YouTube show Rising.

    https://www.youtube.com/channel/UCPWXiRWZ29zrxPFIQT7eHSA

    Something they’ve talked a lot about throughout this whole process is the fact that since the legislation was rushed through so quickly it was the industries who were already prepared, and lobbying for special benefits, that fared the best. Most of the bills in D.C. are actually written by lobbyists, who then shop around for people in Congress who will be willing to sponsor them. Some of the highest paid lobbyists are former member of Congress, who get paid six figures to hobnob around D.C. with their former colleagues.

    The COVID relief bills have been written and passed exactly in the vein of how D.C. generally operates. There’s some level of trying to help out the economy, but on another level there were a lot of well connected lobbyists who had already planned out how they would be able to cash in on a crisis.

    Liked by 3 people

    1. When you say this, it makes sense. It sounds so wrong, but it’s also a ‘Duh’ moment for me. Of course they already had a plan to cash in on the crisis before it began.

      Liked by 1 person

  4. My understanding is if you use it for payroll or utilities it will be forgiven, that might be the 60/40 use of it. Otherwise it’s a 1% interest rate to pay it back and they are determining as they go along.
    Our business qualified, employing 30 people with families. Luckily we found out the first few weeks it was essential, but my H was scrambling and prepping everyone for possible layoffs or cut hours.
    This is going to sound obnoxious, but I’m @ Berkeley Yacht Club and they got one. It’s all volunteer besides one GREAT employee. They shut down and renovated, giving the valuable employee a portion of it and putting him on part time (like he should volunteer too?). I was PISSED & said got on a zoom meeting to shame them. The commodore said that wasn’t the forum to say anything since he was on the zoom. WHAT?? I said 100% should go to that employee.
    The loan amount was all based on how many employees and their yearly salaries, so you could get $25k or $500k (of course more) depending on how many employees. Sorry so long…

    Liked by 2 people

  5. I don’t know about them, but everyone I do know with a small business wasn’t able to get a loan. Based on the information provided, they all qualified. 🤷🏾‍♀️a few were able to survive, others didn’t.

    Liked by 2 people

    1. That’s what’s disheartening the whole thing. Learning a woman who made half a million dollars on her YouTube channel alone was able to take out a PPP loan when her YouTube channel was never in danger while others lost their business completely, it’s shitty. Really shitty.

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