Question: Does a minimum of 75% of the loan have to be used toward payroll to be to be eligible for forgiveness on the loan?
Gary Elekes; EGIA faculty member and iMarket Solutions Founder:
That’s the requirement. In fact, we went through this this morning in our own company. Our costs end up being, on the operating expense side that we would even consider, only about 10%. So yeah, you need to be using it for payroll.
What they’re not interested in is giving you money so that you can pay down another note that’s a higher interest rate and get a loan at a lower interest rate. It’s a stimulus, it’s an injection, it’s designed to keep people working and keep payroll flowing.
They’re not ignoring the idea that you might have a rent payment due on a building, so it helps the person collecting the rent for the building. So, you can use some of that but you have to use most of it for payroll, that’s the idea.
Weldon Long; EGIA faculty member and New York Times Bestselling Author:
Another recommendation I would make is based on one of the questions that was asked earlier by a company with hundred people. We’re paying all our people because I want to be able to qualify for the loan, I want to be qualified for the forgiveness if we decide we’re going to exercise that option, and that means I have to employ my people. Well my people aren’t all that busy right now.
So, we had one of our managers go on and do an interview on one of the local television stations and simply extend an offer that hey, we have a lot of people that are sheltering in place, elderly people, people who are immunodeficient, people that are high-risk. We’re all of the city all day in our trucks, if you need deliveries of medication, if you need deliveries of groceries or supplies or anything, call us up! We have vans all over the city, we’ll drop stuff off and put it on your doorstep.
The response to that has been absolutely mind-boggling! People really appreciated that. It was funny watching the interview. I didn’t do it, one of our managers did it, and the anchor was like, “What? You’re doing what?”
And people have been calling asking us to pick up groceries and medicine and all sorts of things. These are vulnerable people, and you may have people take advantage of you but I don’t give a rip about that! I’m more concerned about the people who just need to help.
There are lots of things that we can do to improve our presence, our brand, and the quality of our brand. If you’re going to employ your people anyway to be compensated or forgiven on these loans, let them get out there and do some community service.
Imagine 5 or 10 of your trucks parked up on the side of a highway cleaning up a one-mile section of the highway. You’re going to pay them anyway and the government is going to pay you back for that. Get them out there doing some public service. Do whatever you can. Get your trucks on the road. The media will cover that stuff, they’ll eat that stuff up. Do what you have to do to make an impression.