“And if you haven’t heard, Congress has just passed a $2.2 trillion package which is a lot of money. It’s comparatively, actually, more money than was spent during World War II. So it’s something that hasn’t been done, ever.” -- Rob Richardson

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ROB RICHARDSON
Welcome to Disruption Now. I’m your host and moderator, Rob Richardson.

TUNDE OGUNLANA
I’m Tunde Ogunlana…

APRYL POPE
…and I’m Apryl Pope.

ROB
We want to bring a special coverage as the corona crisis continues and to really let you know how your small business can respond. If you haven’t heard, Congress has just passed a $2.2 trillion package which is a lot of money. It’s comparatively, actually, more money than was spent during World War II. So it’s something that hasn’t been done, ever. Of course, we haven’t seen anything like the virus.

Politics aside, you probably heard me rant on parts of the bill. I have a love-hate relationship with this bill. We’re going to talk about the parts that I actually love. I think there are some good parts to this bill particularly when it comes to small business, particularly at this unique moment at this unique time in history -- not only American history but we’re talking world history. The coronavirus has really stopped business in its tracks.

You could have planned your entire life, your entire career, you could have done everything right, but no one plans to go from like a hundred to zero just like that without any type of warning, without any type of buildup and just see most of commerce shut down. So we’re seeing things that we haven’t seen.

In some ways, this part of the bill is a good part of the bill despite other parts of the bill that I hate -- but I’ll leave that for another podcast.

I have two experts on here that are financial planners -- both people I have leaned on; I’ve known for a long time. Most of you know Tunde Ogunlana who’s been on the show on a regular basis. Some of you do not know my friend, Apryl Pope. We go way, way back -- elementary way back. I trust both of their perspectives implicitly.

I think people need to understand the opportunities in this bill because there are opportunities. So we are going to go through, as easy as we can, what you need to know -- the highlights of the bill, if you should apply, how you should apply, if you’re qualified to apply.

Actually, I’ll start, Apryl, with you. If I’m the average business owner out here, particularly… You know, most business owners are sole proprietors. Still people underestimate this. I think it’s like 90%. If you talk about people of color, almost all business owners are solopreneurs. What are the opportunities for small business in general but also for solo entrepreneurs, gig -- you know, people that are just maybe one, two or just maybe themselves in this bill?

APRYL
Yeah, I think there’s quite a few things for the small business in general. But for that specific question, the first one that comes to mind, is… We talked about the Economic Injury Disaster loans and the grants for those. Those are designed for, what you said, the solopreneurs. It could be small businesses up to 500 employees. But it’s really that independent contractor, sole proprietor, the solopreneur that was getting their business going. They’re doing a great job, like you said, but who… We can’t plan for this.

So it’s really low interest loans. It could be up to $2 million. In those loans, that’s fine. But the nice part that they added in was an additional up to $10,000 advance that you don’t have to pay back and that’s like to help right now--

It’s supposed to be within three days of applying. So you go to sba.gov. Apply within three days. You have to figure out how much you get. But it could be up to $10,000 and you don’t have to pay it back. I think that is to be able to pay for those things -- like our rent, leases, for copiers and all the stuff that small businesses… When it’s just you and all your sales just came to a halt, you still have responsibilities.

And we, as planners -- I’m sure Tunde does the same -- we teach how to have your emergency fund, have your savings for this. But when everything stops, you blow through that real quick. And you don’t know when it’s going to end, either. In Ohio here, it extended till the end of… or May 1st. Our kids are not even going to be back to school yet.

ROB
Yeah, oh gosh. Then we all are going to be teaching our kids, too. Hooh, a lot of work.

APRYL
Yes. I’m like a financial planner half a day--

ROB
You got three. You got three.

APRYL
Three boys at home that I’m homeschooling right now, so… yes.

ROB
[Laughter]

TUNDE
That’s the perfect job in America.

APRYL
Oh my goodness. Yes. Yes, having fun. Having fun. But I think that’s, I would say, the main thing that comes to mind of the three things that I think are the most important for small businesses -- that loan assistance and that instant up to $10,000 cash.

ROB
Tunde, what’s your thoughts here?

TUNDE
I agree with you, guys. There’s a lot in this package that is going to help small businesses and sole proprietors. I’m very impressed with the real nod to the small and mid-sized business community in this stimulus package.

When I started doing the research for this show and really trying to get in the weeds, I was impressed with what I saw in general. Like you said, Rob, I’m sure there’s definitely stuff that we can look at and frown upon but I think the majority of it, from what I saw, looks like they’re doing the right thing and trying to do the right thing.

I think my concern is going to be the execution of it. And not to bash anybody, whether the government entities or the businesses, like you guys identified, we’re in crisis mode. You’ve got SBA employees as well as bankers that are all working remotely, too, and all dealing like we are with probably kids at home, all that.

Doing the system takes some time in paperwork and all that stuff to get things done. Now you’re going to have millions of people coming at it unexpectedly and the workers in that system are hampered from being remote.

And just all the stuff we’re all going through, I think that everyone’s got to hit the patience button and realize this probably isn’t going to be the smoothest execution over the next couple of weeks to a few months. But again, I don’t think there could ever be a smooth execution for… Like Rob said, you go from a hundred to zero overnight, technically.

I think it’s a great first step. I do think this is going to be the start of several stimulus packages. I think we’re going to be well into the mid-trillions, maybe five or six trillion by the time this is over.
And what I read, which was very interesting, was that the bill was passed… I think it’s important to note that we’re taping this show, actually, on the 31st of March which is a Tuesday. The bill was passed on Friday, the 27th.

So right now, we’ve got a Federal Act that was passed by Congress, signed by the president but both the SBA and the Treasury Department have said that they haven’t actually finished all the final details. So I think it’s going to be very important for everyone to just keep paying attention because as much as we’re going to share on this show today, we’re still limited because the actual details aren’t finished yet.

ROB
Yeah. I think that’s a great point. Let me just break down highlights so folks understand. And please correct me if I missed something. I’m not giving advice as a financial planner or anything financial but I will give my understanding as an attorney, having read through this. I’ll try to break this down for people.

There’s essentially two different types of loans… two different components of the loans. We’ve talked about one. I’m just going to call it “EID Loan” for short -- E-I-D, “Economic Injury Disaster Loan.” That’s the type that Apryl talk about a lot. That is essentially, I believe, what most of the smaller businesses are likely to apply for. You might get the next one. I’ll talk about it in a minute. Loans are up to $2 million. The term is about 30 years. The interest rates are 3.75% for businesses. You can actually get this for nonprofits, too. It’s at 2.75% for nonprofits.

There are some really great opportunities here, too. From my point of view, if you find yourself as a business that is not hurting right now, you still may want to apply for this loan because, A] You don’t know the future. B] It still could be a good opportunity for you because these SBA loans are normally… They are available. It’s been a great program for a while but it normally doesn’t apply to many individuals. Most people are excluded from this opportunity.

But this time, you get an opportunity even if you’re a solo entrepreneur. You don’t even have to personally guarantee which means that you don’t have to guarantee yourself to pay it back. It just goes through the business – a huge difference and a huge opportunity. You don’t have to put any security up except for maybe interest in your business which I see is a huge opportunity. At least that’s for the inside.

And I’ll talk about the other side which is called the “Paycheck Protection” -- I’ll just call it the “PLG Loan” for now -- which is a little different -- a little more scaled, more money but a whole bunch more strings. We’ll go down to that in a minute.

I want to actually dive a little bit more into this first -- into the EID loans -- and what you should think about as a financial planner… No, not as a financial… As financial planners, if you’re advising businesses, after what I just went through a little bit--

Yes, there’s a good opportunity that you don’t have to personally guarantee. Yes, you can get access to loans at a level that you didn’t before. What considerations should you make if you should take out a loan? And how much? What type of planning or thought process that you put into as a small business owner looking at this loan, particularly the EID loan? -- We’ll get to the other loan next. Apryl, [it’s up to you - 10:10].

APRYL
Okay. I’ll go first?

ROB
[Then I’ll go to - 10:11] Tunde.

APRYL
Okay. One thing, like you said, yes, you don’t have to guarantee it with anything. And also, another part is, usually for this loans, you have to prove that you can’t get funding anywhere else. They’ve waive that as well. So they’re making it easily accessible.

Also, there’s no prepayment penalty. Rob, you were saying you don’t know what’s going to happen. And I think depending on the type of business that you have… Okay, yeah, we maybe go back to school -- probably not. So kids aren’t going back to school. But when businesses open, are they going to be running back out to your hair salon or wherever it is, if people have been struck financially this long? They might not be coming right back to whatever your business was. So not knowing what the future is going to be… If you do apply for it and don’t need it, you can send it back.

I’ve talked about this with my businesses and nonprofits. I have one business owner who was talking about getting it, thinking about it. She is a service-based business. She is doing some stuff on Zoom like this but a lot of her contracts got shut down. So she feels like, “I don’t want to take a loan because I don’t want to go into debt. I don’t want another bill. I don’t want any of this,” and I told her, “I get that” -- because that’s what we teach. We don’t want to go into a bunch of that. You don’t want to have an extra bill. We don’t want to do that.

But I was telling her, “If it’s between your business closing and you taking this assist…” That’s what this assistance is here for. If you don’t need it, send it back or do something else. But wait till June and then you’re like, “Oh my gosh, if I would have just had $5000… because I’ve already run through everything. I could have had it.”

ROB
And Tunde, follow up on this as well. My understanding is the $10,000 is almost… That’s pretty much a grant. So I don’t see the disadvantage of applying for it assuming that you’re eligible for it which--

You have to actually have been in business. This is why it’s important… We’re talking about income inequality. It’s important to have a business set up even if you don’t have employees. People think, “Oh I have to have employees. I have to have all these great ideas and plans.” No. Just start the business and then work through your plans. -- Tunde, what are your thoughts on it?

TUNDE
That’s a great segue, Rob, because it gets me thinking about record-keeping. I think Apryl pointed out something very important because debt is very psychological. We’ve all heard there’s kind of good and bad debt. I’m a big kind of proponent of being debt-free. My joke to everybody is “The best retirement plan is being debt-free.”

Apryl’s 100% right. Sometimes, you need to borrow in order to survive as a business. And that’s okay especially if you’re kind of running a tight ship and you know that you’ll be able to control the payoff.

Now I think this is a unique situation for us all -- around the world, actually -- because this isn’t a normal recession that’s just a business cycle recession where you kind of can predict certain things.

I was talking to my wife today, actually. It’s interesting because our youngest son has an autoimmune deficiency so he is more susceptible to this virus and we live here in South Florida. I kind of was saying, I could see habits being different after maybe this whole thing is over, so to speak, because in a normal recession… Like Apryl said, we all will go out and just kind of spend what we have again and all that and go to restaurants. And I said, you know… [tell him - 13:46] 100% sure this virus is gone or there’s a vaccine that works. I’m not going to be going to Disneyworld or going to some packed restaurant with my kids because I’m not just going to take that risk.

So if you multiply anybody with a potential health concern by millions… you know, multiply that by millions, example--

I think Apryl’s right to give that caution, that if you have that hair salon or the small business over here, the car wash, whatever it is, people might not be just rushing back because this isn’t just about money. This is about people’s health, their concerns about certain things. So I think that’s what make this a little bit scarier and more unknown for most business owners is because you can’t… We’re fighting against a virus that has to run through the system. And we also got to get a vaccine. That’s going to take months--

ROB
And we got to run through the system and people have to have assurances and faith that it is working. Those are two parts. You have to actually solve it and people have to believe that it’s solved which are two different things.

TUNDE
Correct. That’s why I think, this week, we should warn everybody. I mean I hate to be kind of somber on this with my message but this is going to take a long time -- I think, at least, three to six months to do.

Just what you said, Rob, is just get an idea of how this is playing out. And then from there, it might take up to a year for us to really feel good because that’s how long it might take to have vaccines and all this stuff for us to really feel safe.

ROB
Yeah.

TUNDE
Back to Apryl’s point about the savings and all that, everybody needs to kind of really look at their own financials, how they’re living, all that. And that’s why I said, after reading what I read so far, the government seems to be, in this case, doing an honest way of trying to include small businesses. It isn’t just a giveaway for the large corporations and all that.

ROB
Correct.

TUNDE
They’re going to get theirs, for sure.

ROB
They still got the better end of the deal but at least this one is--

TUNDE
Yeah. But they’re making sure that it is small--

ROB
What I appreciate, Tunde, to your point, is that this did something for small business. And something I want to highlight that you both brought up that I think I have a little point of distinction on, yes, you got to be very careful with debt. Business, that is different from personal debt though. This is the point of business. This is why we created this construct that is business. Normally, in these loans, my understanding--

We’re just talking about EID loans and we’re going to go to the PLGs later. So remember, there’s two different types. I’ll repeat it over again. There’s the EID loans. That’s for the economic disaster relief. And then there’s what’s called the “Paycheck loans” -- essentially, helping to cover your workforce.

For the EID loans, my understanding is for $200,000 and below, you are not personally in debt. You don’t have to guarantee that Apryl Pope has to pay this back.

So it's something that people have to get comfortable with. This is a different type of debt. This is why you have a business debt to protect you from all your personal assets going away if something doesn't go right.

I'm not telling you to take the $200,000. I just think people have to know that this is not the same because a lot of these folks -- we're talking about solo entrepreneurs, these people that have had their own business and it's only been them or one or two or three other people -- they have traditionally not gotten these SBA loans.

So this is a new thing. This is a new opportunity to at least get some inflection of cash if you need it or if you could use it to grow your business and you think you… because all of this is a leap of faith at some point. At some point, that's what business is.

But if you have a business that's here, that's in existence and you have good credit… This is another thing as part of it that you guys can speak to. Good credit is important. If you have good credit and you have a business, you can get a loan. Essentially, the high work is now for up to $200,000 pretty quickly, theoretically. -- Go ahead, Tunde. You want something to say?

TUNDE
Yeah, because I wanted to get back to the point I made earlier about the record-keeping because I think part of… Where I see the strength of Apryl and I to be able to help people watching now is also on some of these financial planning tools and tips because we don't have the final… Like we mentioned earlier, the Act is passed but the SBA and the Treasury still haven't finalized all the details.

But I think as a business owner… And Apryl, definitely hop in here to give your two cents. I feel like most business owners have certain strengths and weaknesses because we're all human beings, right? We all have a psychology. We all lean towards certain things.

Most of the people that get into business are usually visionary type. They want to look over the horizon. They're not the people in the weeds with the blinders on looking at Excel spreadsheets. I mean there are business owners that are very meticulous and detailed but many aren't. I know that's one of the areas that I used to have a much greater weakness. I mean I think it is still a weakness of mine. But as I’ve matured in business, I’ve realized I need to respect data, the details and information.

I think when I was reading just stuff about this package, and to Rob's point about having good credit, the fact that you need to file your taxes, all these things are things that we kind of take for granted. And a lot of business owners know they should be doing it. I mean I think everyone files their taxes eventually. They do it timely, to have programs like QuickBooks, to not co-mingle your business and personal finances.

When I was just reading up and preparing for the show, the amount of records are going to be asking people for, that's when it hit me. I was thinking one thing that I wanted to make sure we mention was that any entrepreneur that's not taken record-keeping seriously, they might be hurt by not having good books and records during this period of time, either trying to get help or later on, when the government comes back to check, A] “Did you spend all that money on payroll or not? You better show us” because remember, that part of the loan, which I think you're going to get into next, Rob, that is supposed to be for a certain period of time. And whatever isn't spent is then either got to give back to the government or then they turn it into a long-term loan that you're paying back over time.

ROB
Oh yep, and then you're on the hook. There's no forgiving. We can actually move to that part. Is there any other part you wanted to talk about with the EID loan?

TUNDE
No. I just want to give the floor to Apryl to shed any… kind of just two cents on advice for a second.

ROB
No, please.

APRYL
I think you're right with the record-keeping. And I think we say it's easy but--

I was looking on the SBA and it says, “Upload this document” and scanning up for this document and “Make sure your taxes…” and “Where are you filing all of this?” So those that aren't… I think, there's a lot of things that are going to come out of this that are maybe positive. I think it's going to be wake-up calls for a lot of people.

TUNDE
Yeah.

APRYL
Our personal wealth management clients, yes, they already know. I mean this is a huge wake-up call if you hadn't had your emergency fund and you have a bunch of debt -- wake-up call. But for businesses and nonprofits--

You know, when you keep saying, “I'm going to get that file. I'm going to do this. I'm going to get that all in QuickBooks. I'm going to do this,” and now you want to get that loan and you're trying to apply tomorrow and you can't upload and find all of these documents, I'm hoping that it will be a wake-up call so that you realize you're running a business. If you look inside your business, would you fire yourself if you were applying that? If you were somewhere else, they’d probably fire you.

You are the boss. If you look at your back office and you're like, “Hooh,” you would probably fire yourself. Then it's time to get that together and spend this time at home doing it right now.

ROB
Yep. [Crosstalk - 21:14]--

TUNDE
That's a great point, Apryl. I want to throw this in here. I remember when I was younger and I was working more in corporate, in the big office buildings and all that, I remember there was a guy whose desk was so messy. I was a young kid, in my 20s. I was in this guy's office. It was real messy. And one of the older guys came in and looked at him and had like a serious look and he said to him, “Would you hire a guy that kept his office like that,” meaning, as a financial planner. And the guy whose office I was in didn’t answer and I know exactly what the answer was.

APRYL
Yep.

ROB
[Laughter]

TUNDE
But it’s funny. It was a great learning lesson for me as a young kid because it makes you think, right? Like, if I'm so sloppy that I wouldn't even hire myself… And I think that's what you're saying, Rob.

One thing I would want to just add here is there's a book that really helped me. To all the entrepreneurs out there, really appreciate and respect kind of the… This is what we're talking about that -- the attention to detail.

There’s a book called “Traction” by Gino Wickman. And I got no association with him or the book or the publishing company. That's not a plug for me to make money. That's an honest plug. It was a very good book that took a guy that's… kind of, you know, always in the clouds, thinking about the next thing over here and on the horizon. That matured me a lot to say you can't forget to look down and still at one foot in front of the other. So I just want to put that out there [crosstalk - 22:40].

ROB
That's a good point. Bring this all the way home. So for folks that haven’t done anything with the government -- I’ve done grants and things like that -- you have to follow everything to a tee because they look for ways to disqualify you. That’s literally what’s done, at least at the government level.

APRYL
Oh yeah. [Crosstalk - 23:00].

ROB
You can have a good package and you think, “Oh I’m being creative because I did this and that.” No. Give them exactly what they say within the four corners -- what they say, exactly how they say it no matter how dumb it sounds. I mean this sounds like I’m being crazy but this is exactly how, from all of my experience in working with government. Don’t go outside the line. Make sure you understand what they’re asking you. And only give them -- only give them -- what they’re asking you.

APRYL
I was going to say, real quick, they already sent a message out today that said if you’ve applied for the loan yesterday or two days ago, apply again. They said apply again because you have to check another box that says you want to be considered for up to the $10,000 advance. So people are thinking, “I already applied. I already applied.” And it literally said, “If you’ve already applied, just apply again. It won’t affect anything.” So you got to jump through those hoops and do what they say.

ROB
We have a friend, to your point… Tunde and I were talking to him. We said, “There’s loans coming out. You should apply.” He said, “Well I already did.” We said, “It was just passed last Friday. How did you apply for it?” [Laughter]

APRYL
Apply again. Apply again.

TUNDE
And I think [we texted him - 24:03] on Saturday, right?

ROB
Yeah, exactly. I was like, “Mm-mm.” I don’t know.

APRYL
Do it again. Just in case you [inaudible - 24:10].

ROB
You need to do it and make sure you are following. I know this sounds like a broken record but it is so important because you don’t want to disqualify yourself for something that you’re actually qualified for. So go through it.

In this podcast, we’re going to give you all the reference points, where you can go, all the articles we referenced as easy as it can be outlined. I won’t say it’s rocket science but it is science to know how to deal with these things and maneuver through them.

TUNDE
One thing I’d like to add, Rob, before we jump is… because it reminds me here that… because you talked a little bit about the SBA and the mechanics. I think it’s important for the audience to understand from 30,000 feet how the whole system works.

The loans and the grants aren’t actually going to be given by the government. The government is not in the business of distributing money in this way. I know they do it in other ways. What happens is the federal government through the SBA -- the Small Business Administration, one of the departments in the government -- has relationships with around 2000 lending institutions, primarily banks and credit unions, around the country.

So it’s a good example of when the private-public partnership works where the government is going to basically, like Rob had mentioned, backstop the banks to guarantee… So if the entrepreneur fails to pay it back, the bank can feel secure in lending that money. Kind of like Freddie Mac and Fannie Mae do with mortgages.

That’s why I say it to say, to Rob’s point even more, there’s going to be a lot of red tape to go through because you’ve got different layers of institutions that will also need to check their boxes off because those banks are going to be audited by the government at some point to make sure they didn’t do, first off--

ROB
And the banks never had to do it like this.

TUNDE
Correct.

ROB
Tunde, it’s more like a traditional loan when you do the SBA. It’s a loan. It takes a lot longer… They essentially do a halfway loan and a halfway grant. So we’re all in new territory. Banks don’t do this. So we also have to know that--

As we’re going to keep repeating this, it’s going to be building the airplane while we’re flying. It doesn’t mean you should be intimated though. I want people to not be intimated. Don’t be intimated. Just learn. This is why we’re doing this. We’re providing the materials. All the materials on here, we’re not going to make any guarantees, but I believe if you follow it, it will make your life a lot easier. That’s why we’re going to put this out here.

Our goal is to educate. Our goal is to empower. Particularly, I’m talking about small black and brown entrepreneurs. We know you have significant challenges and there are some skepticism built up but do not let this opportunity go. There is opportunity to make that your business survives, too, not only thrive. We don’t know what’s going to happen. I do think, at a minimum--

We’re going to close on this. We’re going to reiterate it over and over again. You should at least go through the steps. Take your time and apply. Now it depends on which ones you want to do or if you want to do both.

So we’ve talked about the EID loans pretty extensively. I want to talk now about the Paycheck Protection Program Loan Guarantee. I’m just going to call it “PLG.” It’s really three “Ps.” But “PLG” to make it easy.

APRYL
I’m glad you didn’t say “PPP.”

ROB
[Laughter] No, I didn’t say “PPPLG.” That’s too much. So the EID loans, we went through. You can get up to $2 million. This one, I think you can get up to $10 million. I think the terms is 30 years. It could be 4%. And there are also a lot of similar things. It can be for a smaller business that are fewer than 500. It can be for some businesses that I think are up to 1500 employees for select businesses.

But essentially, if I understand it correctly, this purpose is to really help to make sure that you maintain your employees particularly if you want it forgiven. You have to have proof of your payroll, which goes back to Tunde’s earlier point, for a certain period of time -- when you start the loan to when the loan ended.

A lot of it can be forgiven if you spent it on payroll and a few other things. But particularly, payroll is one of the biggest things. But if you don’t spend it on these things, you’re going to have a traditional loan, some of which that you would have to personally guarantee. So this one’s a little different. I would say more money, more strings.

I’ll start with Tunde to get kind of your impressions of this part of the “PLG loan,” we’ll call it. What would you say are the opportunities here that are a little bit different from the EID loan?

TUNDE
I’ll start with saying these are the times when I really regret not having a real close friend that owns a bank because I could have a fun time retiring after this loan. But on a serious note, I think it’s--

Again, it’s another interesting move that I think is going to be needed by many businesses. Like you said, Rob, we went from a hundred to zero. This is unprecedented in terms of… And it goes back to Apryl’s earlier point about people have… -- You said something about leasing a copier, Apryl.

People don’t realize, when you own a business, how much all that stuff cost, depending on how big your business is. If you own… not “own” but you might rent 10,000 sq. ft. in some office building in a downtown and you’ve got X amount of printers, copiers, all that stuff, you’ve got mail, so you might be spending $40-50,000 a month just on that stuff and then you got payroll on top of it.
Again, it’s another good example of how they try to address all these issues at once in a very quick way. Again, let’s see what the details all shake out to but I generally feel good about what I saw.

One of the other things I feel good… because I’m thinking about, obviously, the big number of $10 million maximum. I saw that sole proprietors and even tenant[s] and contractors are also fully eligible which I thought was great because I think--

Again, with record-keeping and all that, some people aren’t that good at it. Maybe they didn’t get incorporated properly and they don’t have an LLC or an S-Corp set up. Maybe they’re not being perfect about having money going the top of the company and then paying themselves personally. They might literally be getting just 1099 income and just spending it on their family and their personal life and their mortgage and all that.

I believe what I saw was, as long as you have your 1099s from 2019, they’ll use those in lieu of, let’s say, a payroll for yourself if you’re an entrepreneur and they’ll go up to $100,000. So if you figure two and half months where the payroll will be $8300 a month roughly on a $100,000, times two and a half. So even somebody with terrible records and all that stuff is eligible for at least that.

Again, for at least the next few weeks to a few months… And again, my only concern is… I know like Apryl said, business owners need this now. Like in the next week, they’re going to start… you know. If this takes two months to get to people’s hands, we’ll already see the layoffs and all that happen and it will be… you know. So again, I’m not blaming anybody because I think that’s--

ROB
I had a whole another show before this taping about how other systems do it. So no need. I did it for you. So there you go.

TUNDE
Yeah, yeah. I was just making a point that it’s… But this is the real life stuff, right? I mean it’s not to blame the government. It’s not to blame the business owners. It’s just you got millions of people hitting the system at once.

ROB
Right. Yes.

TUNDE
Just like the hospitals are all messed up in New York because you got tens of thousands of people unexpectedly showing up.

ROB
Absolutely.

TUNDE
So I think that’s why everybody is just going to have a little patience and let’s see how it works out. I mean it’s unpredictable at this point.

ROB
Yep. -- Apryl.

APRYL
Yeah. I agree with all of that. And I think one thing, to make sure people understand payroll, well payroll is more than salaries. That’s health care benefits that you have to pay for people. This includes, even in this Act, retirement benefits, sick leave, family leave. All of these things that you pay for your employees, they’re counting that. So it could be a big expense. Health care alone is super expensive. [Crosstalk - 32:35].

ROB
Yeah, it is really expensive.

APRYL
And so when you add all of that up… I mean that’s why this has to be a lot more money because even if you have five or 10 people on your payroll and you’re paying for all of that… And that is all included in that. So that’s payment for vacation -- I was looking at the specifics -- medical, sick leave, insurance premiums, retirement benefits.

I’m a 401k advisor, 403b advisor. A lot of my companies, nonprofits more specifically, they have a match. They have a match and they want to fully fund their retirement accounts or help fund retirement accounts for their employees, and that was in the budget. Well if things just stopped or big huge fundraisers in the nonprofit world… It’s fundraisers that do everything. They make several hundred thousand dollars in a night. Well all of those have been cancelled, right?

ROB
Yeah.

APRYL
So you have a big bill where you’re going to put… It didn’t hurt you to match your employees, 3, 4, 5%, put whatever you want into it. Well that’s a payroll thing. So keeping that in mind that it’s more than just the salaries. It’s also covering all those benefits that payroll really… Think of whatever payroll system you use. All those boxes you look in or even your own pay stub, all those little boxes and all those little numbers, all that is going to payroll. That’s what they’re helping with. So I think that is nice.

ROB
As I read it, just the attorney in me, it looks like it covers… You can cover a lot of things for business -- electricity, gas, water, transportation, telephone, internet access for services which began before February 15th of 2020.
But this is what we want to say: There’s a payroll exception and then there’s the exception to the payroll exception.

I just want to tell people it’s not hard as it sound. There’s two different levels. Let’s just keep it bottom line. You have to essentially keep the same average amount of employees for the first eight-week period when you started the loan. That is necessary for you to do. And you can have an additional penalty if you cut the compensation of any of your employees that make under $100,000. So that’s the basic rule.

So essentially, you can get all these things. I mean a lot of them forgiven for huge amount of money. The big trick is that it has to be on your payroll -- just to make people understand that because there’s a lot of small business owners that have people that work for them but they’re not their employees. They’re independent contractors which I don’t think this counts towards. So that is something people need to understand, that just because you have someone that seemingly seems like an employee, the person actually has to be an employee, not an independent contractor. If I’m wrong on that, please let me know.

TUNDE
You’re right from the legal standpoint. Say, I have my business and then Rob, I hired you honestly as a contractor -- as an attorney, let's say, to help me with securities law -- then technically, you're not my employee. So yeah, if I said, “Rob, I can't pay you anymore. The doors are shut. Things slowed down,” that's just it. Yeah, you're right, you got to eat it.

The reason why it made me think… because I was on a webinar today that was very interesting and informative and they got into the idea of PEOs. PEOs are organizations that many small businesses may have heard of or used. The two biggest ones in the country are ADP and Paychex and they're basically like outsourced HR departments. They can give you employees. They can give you 401k plans, operations, manuals, all that kind of stuff.

The question came up from someone on the webinar about that. “If you have a PEO through your employees, how does that work?” And they basically said that it's on your Form 941 -- you know, the IRS form. And basically, that'll tell you if your employees are your employees or if they're employees of the PEO that might be just kind of being hired out to you. And what they said was if they’re PEO employees then the PEO is the one that's got to go through the government and deal with it.

What I could see though is some lack of understanding from maybe even the employee class because if you're showing up at one office every day for work, and depending what your paycheck says because it might actually… You know, everything is white labeled these days. So your paycheck might say it's coming from the company that you're going in that office for every day but really, behind the scenes, you might actually be the employee… Like Paychex is paying your salary in a sense.
ROB
Right. Like a temp service, essentially.

TUNDE
They're charging your revenue share, something from the business.

ROB
Yeah. Like a temp service that [crosstalk - 37:19].

TUNDE
That’s why I wanted to bring that up is just… Again, everyone's got to be careful with those little nuances.

ROB
Absolutely, because you can still get the cost covered. Here's what I want people to know. You can get some costs covered but like… The loan cover is basically 2.5 times the payroll amount.

TUNDE
Correct -- payroll.

ROB
So if you don't have any payroll, this is not the loan for you.

TUNDE
Correct. So you might not have 10 employees but you might go--

ROB
This is not a loan for you. That would be the EID. You would go back to the EID loan. That's what people need to know -- the difference between these two…

APRYL
Correct.

ROB
…and why it's so important. So the EID loan would be an opportunity for you because that's not solely dependent upon your payroll. And your payroll, like I said, it has to be somebody working for you. And if it's somebody working for you, you're subject to all the labor laws and things like that, too. Let me just bring up that point very quickly.

So if you're not paying your people accordingly and you're not paying them minimum wage or you're not paying them enough in order to meet the Fair [Labor] Standards Act… which is why a lot of new businesses don't do this because there's a lot for them to do immediately. If you're not doing all that and then you try to take this out, you're opening yourself to a whole can of worms.
So that's why I said there's more money in this Paycheck loan but there's a whole lot more strings. And you should be very, very, very cognizant of what these strings are and careful if you really want to apply for this one. That's my view of it just as an attorney.

But is there any other thoughts about this loan and what people need to look at? And then after that, I want to look at… If you can go after both and then just overall takeaway. So any final thoughts with the PLG loans, about what businesses should look at and really how they should assess?

APRYL
Not really. I mean I think we covered it pretty well. One thing that I want to mention that's another part of it is the debt relief or if you do already have an SBA loan or like one of those micro loans, they did have some language that they wrote in there where it's really designated to provide immediate relief.

So if you had those loans and now you can't afford them -- you can't afford the payments, you were doing fine and you just gotten all set up and you know how long it takes to get your SBA loan -- they're covering that for up to six months for the fees and the expenses and the interest and payment and things.

So that's just one other thing to think about where there is a little bit of relief there. And that even extends for people who get a loan between, I think, when the bill was signed into law and six months past that. So just keeping that in mind. There is that small business debt relief as a part of it as well.

ROB
Okay. So final thoughts as we think about the bill and wrap it up. Can you apply for both loans? The answer to that I’ll just say, from legal standpoint, is “Yes,” however, you got to make sure… Again, I’d be very careful. Just as a general matter, I’ll probably hire an attorney and an accountant to make sure that you don't cross-pollinate. You basically can't cover the same cost with the loans. So you can't try to say, “Oh I have this cost and I’ll also cover both loans.” You do that, it'll get you in trouble or maybe you'll get yourself disqualified from both loans. So don't do that. This is why you want to be careful and cognizant of what you're doing.

If you qualify… We went over this. Do you qualify? Generally, this is how you're going to qualify: You still have to have some basics; some of the foundation. As Tunde said, you need to make sure your taxes were turned in on time before… If you weren't compliant with your taxes, you're probably not going to be able to get this. If you owed child support, you probably won't get it either.

And your business has to be in existence. This is why we talked about having businesses, owning businesses, starting your side hustle no matter what because you're not eligible… If you didn't have a business started by January, you're not eligible for any of this stuff. So you can't just say, “Oh I want to create a new business. And look, I have opportunities now.” You can't do that. You can't go backwards.

And then I think for the… Tunde mentioned this, “having relationships.” Hopefully, you have relationships with your bankers. This is where it matters because it's money coming from the “government.” But you're not going to deal with the government. You're going to deal with your financial institutions.

APRYL
It’s not their money. It's not the government's money.

ROB
No.

APRYL
They’re just 100% backing it.

ROB
Correct. So you're going to have to have a relationship. If you have good credit and if you have any type of relationship with your bank, you can qualify for one of these loans.

And I think we're all saying you should, at least at the EID loan, look at the $10,000 which is essentially a grant if you qualify. And then the $200,000 with the EID loan, if you have good personal credit, you can pretty much have the ability to have that $200,000. It doesn't mean you should take it. But should you apply for it? Absolutely, and then see what you need and assess going forward.

This is a unique opportunity and a unique time. And the system is probably going to be overwhelmed so I would do it sooner rather than later.

Any other thoughts about folks as we kind of just wrap up and have our final thoughts in? I think we've had a great discussion. I think we want to actually try to have a live session or something like that to allow people to ask questions live, at least to us, because I think this would be very informative. And this won't be a one-time off because I think more questions are going to come. It just started. As Tunde said, more revelations are going to come and we're going to try to give you the information. Any other final thoughts for the audience before we close?

TUNDE
I have one.

ROB
Okay.

TUNDE
Because on those webinars… I just want to share this. It was very interesting because it was tailored towards, actually, Apryl, folks in our business.

APRYL
Mm-hmm, okay.

TUNDE
I'm just telling because we have so many 1099 folks and all that. They were saying that if you have… Let's say, you acquired a business in recent period of time where you're still paying off, let's say, an installment note that… And I don't remember now, forgive me, the detail of which loan would qualify, so definitely, one would have to go research that. But they said that paying the principal payments and interest payments on that buyout would actually be qualified under this because it’s seen as continuing the flow of your business.

APRYL
Yeah.

TUNDE
So again, if Apryl bought in my practice two years ago and let's say we had a three to five-year… you know, just soft-landing where she's paying me over that time, now if she applied and got one of those two loans -- my memory is foggy -- that payment stream to me would be considered eligible. So that's great to know.

APRYL
Yeah.

TUNDE
Yeah. And then the other is… I just want to share with the audience. A lot of this comes down to our psychology -- how we deal with this moment. You know, it's definitely trying to stay glass half-full. And what I've been doing is trying to be very proactive and aggressive.

And I was talking to my team and dealing with some consultants I know that are in the… They're in the business of brokering, wealth management practices and buying and selling RIAs and broker-dealers. My thought is I want to use this moment to grow my business. There's going to be a lot of people that are in our business that are older, that are getting tired of this. Maybe this is the last time they want to deal with a crash and all that. Maybe their practice has fallen to a place where… Maybe I don't buy them out but it makes sense for them to team up and over time, we can kind of take over their book of business.

None of us expected this. Like Rob said, we all went from a hundred to zero all together at once. But I think at this point, we're here, we got to pick ourselves up by our bootstrap and get moving.

So that's my two cents. And I wish everyone the best in this time and hope to see you again.

APRYL
Yeah. You’re right, we have to stay positive. I think there's a lot that's going to come good out of all of this. And I think the way we talk about with our personal clients with financial planning, when a crisis hits, just take care of your four walls. Make sure you have your food, your shelter, your clothing, your health. Make sure you're taking care of that. If the four walls of your business are affected, that's what this is for. Don't feel bad about it. Don't think about it -- any of that.

I think that's really, really important, to just feel… Understand you need to take care of your four walls and stay positive. I mean all the cool things that have happened, I think just being at home and staying at home… Yes, teaching third and fourth grade math is a little bit challenging and I'm a math teacher or I used to be.

ROB
[Laughter] Teaching it to your own kid is another thing, you know. Hooh!

APRYL
Yes. I have a masters in mathematics and I am struggling with third math. But I think everybody in our neighborhood is walking every single day and out and playing with their kids. I've seen two kids learn how to ride bikes this week in our neighborhood that didn't know how to ride bikes because their parents were working 80 hours a week and so they never were able to teach them and now they are.

So there is really good stuff that's coming out of this -- just the family time, the time to work in your business also. So I think taking this time while you're not out networking and going to events and stuff, this is when you can be getting your business in order and getting your house in order.

So take care of your four walls. Make sure you have things to cover… Just like you would think of your financial house that you have inside of your own personal life, think about that for your business. Just make sure you take care of that. And if you do get the loans, put it in the bank. Put it in the savings account. Just let it sit there. You might not need it and you can send it right back.

ROB
All right. Tunde, I know you want to say something before--

TUNDE
Yeah. Thank you. Because I think it's important… You know, I got my first text today from somebody somewhere -- a scam artist -- about this Act. “Call this number and for a fee, we’ll do this.” So I want to really say this. The SBA program is of no cost. So if anyone's trying to charge you for this, it's a scam. The legitimate banks don't charge for this because they're making the interest. So be very careful. This will be the time of the scam artists in this stuff, just in this period of time where some people are desperate and are going to do certain things to make money.

And then the other thing is there's a lot of information out there. We've tried to share enough. But like we said it's not even all finalized yet. So I think that the best resources will be the actual government themselves. So I would say sba.gov, treasury.gov--

ROB
And all that will be up.

TUNDE
Yeah. …the treasury.gov and then whitehouse.gov. I mean just go straight to the source. If you have questions, if you hearing stuff from people, your friends, another… just go right back to those websites because there's going to be a lot of misinformation. Some of it malicious on purpose. Some of it just people misunderstanding and then spreading that. That's what I want to say to the audience. Just go to the source on this one. The government wrote it. Go to their websites.

ROB
Yep, I agree. And we'll have all that up. We'll have other ways to help you navigate it. Until next time, I'm Rob Richardson…

TUNDE
I’m Tunde Ogunlana…

APRYL
…and I’m Apryl Pope.

ROB
We'll see you next time.

[END OF TRANSCRIPT]