Should You Take a PPP Loan If You’re Not In Dire Straits?

Many self-employed and small business owners who did not get applications in before the money ran out the first time around, are now getting them in during this second round of PPP funding, and the frantic level of requests seen previously seem to be a bit more orderly now.  Many people we have spoken to say that they are still working in some limited capacity, or had savings and so are getting by and have avoided taking PPP funds, as they don’t feel “as affected”, although they don’t know what will happen in the future.  That’s the rub.  What if they don’t take the funds today, since they are above water, but the funds again run out, and in August or September they are in trouble?  Will there be a round three and four?  Nobody knows for sure.  Should I apply now, before it’s too late, even if I might not need it?  Our philosophy is “a bird in the hand is worth two in the bush.”  If you could qualify but haven’t yet applied and you have a household and/or employees who rely on you, don’t wait.  Apply now!

Being kind or considerate and not taking that PPP loan now because you might not “need” it may lead to your demise in a few months, when you need it and funds are no longer available.  Proper planning says you take the funds, if available, and save them in a bank account.  If they are never actually needed, you can always use the funds for other purposes, or donate them to a food bank or homeless shelter, since they aren’t taxable to you and will be forgiven (up to maximum amounts), as long as you follow the rules by keeping everyone you had employed at the same level.

Something else to consider; in the future, our income taxes are very likely going up to pay for this.  So if your tax rate goes from 12% pre-shutdown to 20% or 30% after, you may be disappointed that you did not take the assistance that you will then be paying for, and like a mortgage, at a much larger amount than borrowed.  If you qualify…take the forgivable loan!