What Entrepreneurs Need to Know About PPP Round Two

This post comes from Bench, America’s largest bookkeeper for small businesses. If you’re looking to get professional bookkeeping support for loan applications or tax season they can help you get started—you’ll also get a special discount with my referral link! 

--

The US government passed a new stimulus bills in the final days of 2020. If you run a small business, that’s good news: You may be eligible for additional funding. On top of that, the bill has expanded how you can spend existing loans, and made new tax deductions available.

In case you don’t feel like reading through all 5,000 pages of the new stimulus package, here’s everything you need to know.

PPP loans, round two

Didn’t apply for a PPP loan in 2020? You can apply for your first round of funding in 2021.

Got a PPP loan in 2020? You can apply for a second round in 2021. In some cases, you an also increase the amount of your first round retroactively.

In order to qualify for a second round of PPP funding, you’ll need to prove a financial loss for your business in 2020. That means showing, for any quarter of 2020, that you suffered at least a 25% reduction in gross receipts compared to the same quarter in 2019.

Whether you’re applying for your first PPP loan or your second, your loan will have the same, original terms.

That means your second PPP loan follows the same forgiveness guidelines as the first. To qualify, you’ll need to spend at least 60% of the loan amount on payroll, and the rest on eligible expenses.

(Good news, though: The eligible expenses have been expanded. More on that shortly.)

If your PPP loan is not forgiven, you’ll have to pay it back with an interest rate of 1% over five years. The first payments are deferred until 10 months after the term of the loan ends, or when you have your loans forgiven—whichever comes first.

Are you eligible for a PPP loan in 2021?

First PPP loans

You need to meet the following requirements to apply for your first PPP loan in 2021:

• Your business was operating before February 15, 2020

• Your business is still open and operating

• You have less than 500 employees

• If your business has multiple locations, you employ no more than 500 people at each location

Second PPP loans

You need to meet the following requirements to apply for your second PPP loan in 2021:

• You have used all of your first PPP loan amount on eligible expenses

• Your business was operating before February 15, 2020

• Your business is still open and operating

• You have no more than 300 employees

• If your business has multiple locations, you employ no more than 300 people at each location

• You can prove a 25% or greater reduction in gross revenue compared to 2019

Expanded eligible expenses for PPP loans

For the first round of PPP in 2020, the eligible expenses for the loan included payroll, rent, and utilities.

The new stimulus package adds the following eligible expenses. This applies to all PPP loans, past and present:

• Operations costs. Including HR, accounting, and small business bookkeeping, and any software or SaaS tools.

• Property damage costs. Including any damage caused by public disturbances in 2020 that aren’t covered by your insurance.

• Supplier costs. Any purchase of goods essential to operations made prior to receiving your PPP loan.

• Worker protection costs. Including any personal protection equipment or property improvements made to comply with COVID regulations. This applies from March 1, 2020 onwards.

How to increase a previous PPP loan

Many small business owners were approved for PPP loans in 2020, but were uncomfortable keeping the full amount they were approved for. In those cases, the business owners only opted to take a portion of the loan, or returned some of it.

If this situation applies to you, you can apply to receive the difference to meet the full amount. For instance, if you qualified for a $30,000 loan in 2020, but only took $20,000, you can apply now to take the remaining $10,000.

You are not eligible for a loan increase if the SBA has already remitted forgiveness payments for you for the original loan amount. In that case, however, you can still apply for the second PPP loan.

Also, to qualify for an increase, the lender must have reported, prior to Dec. 27, 2020, that you did not take the full loan amount.

BONUS: EIDL is back

The new stimulus introduces an additional $20 billion to relaunch the Economic Injury Disaster Loan (EIDL) program. This allows small businesses to apply for up to $10,000 in grant money. The funding is made available to businesses in low-income communities.

If your business received an EIDL advance last year, but didn’t qualify for the full $10,000, you can apply to receive the difference this year.

If you received an EIDL loan, but didn’t get an advance because the program ran out of money, you can now apply for the entire $10,000 grant.

As part of the CARES act, these loans were promised to be distributed in three days in less. Under the new program, they will be disbursed in 21 days or less.

Good news! EIDL no longer reduces your PPP forgiveness

In 2020, many small businesses learned they would not be forgiven the full amount of their PPP because they got an EIDL advance grant.

Any amount these businesses took as an EIDL grant equally reduced their eligibility for PPP forgiveness. For instance, if you borrowed $20,000 with PPP, and got an EIDL grant of $7,000, you could only apply to have $13,000 of your PPP forgiven.

That’s changed. Now, receiving an EIDL grant will not reduce your forgiveness amount.

How to apply for PPP

To receive either your first or second round of PPP funding, you’ll need to apply through an SBA-approved lending institution. To get started, check out this list of PPP lenders by state.

How to make sure your business navigates 2021

As your business navigates 2021, organized bookkeeping is a must. You’ll need up-to-date, accurate financial statements and records to qualify for PPP or EIDL. 

For this, I recommend Bench, the online bookkeeping service for small businesses. It’s the service I use in my own business. In 2020, Bench helped hundreds of small businesses keep their doors open by aiding them in compliance and reporting, and connecting them with lenders.

Plus, if you’re behind on your bookkeeping, they can get you caught up—so you’re able to apply for funding ASAP.

How Much Should I Pay a Virtual Assistant?

A virtual assistant is a person who works remotely in your business. This means that they could be on another floor in your office building, down the street, or across the globe.

I know virtual assistants who charge $100 per hour, and virtual assistants who charge $4 an hour.

Typically, as you might expect, the more specialized a person’s skills, the more you will pay. Also, if you are hiring in the western part of the world, where the cost of living is high, you can expect to pay more. If you hire from somewhere like the Philippines, South America, or India, you can expect to pay less.

There are lots of misconceptions about these rate differences.

Misconception #1:

Paying someone less than $10 per hour is unethical.

False.  If you hire someone in the Philippines, for example, understand that the cost of living there is much less than in the USA.  The infographic below shows just how different the cost of living is:

For the small business person who can’t afford to pay $25+ per hour, especially at the start, this is a perfect solution.

But the key to success for the business owner and the VA, and what we teach in our program The Front Row CEO, is that it’s important to 1) guarantee hours/use a salary model  2) include bonuses or profit-sharing opportunities.

The salary model:  After a trial period of a week to one month, paid hourly, it’s a good idea to start paying your virtual assistant on a “salary model”. (It’s not *really* a salary, as your VA in the Philippines is not recognized as an employee of your company. They are technically freelancers. But you basically pay them the same amount each week.)  This will go a long way in instilling confidence and trust for both of you. For the VA, this security will almost guarantee that they will stay with you for years, rather than just weeks or months. The mindset here is that the CEO is more concerned with the work getting done, rather than policing the clock.  

Bonuses and profit sharing: As your business grows, everyone grows. When you and your team have success from a product launch, for example, consider rewarding everyone with a cash bonus. Setting goals, with cash rewards, is also a wonderful way to keep morale high. For the VA, this creates a true sense of ownership in your business.

Misconception #2

“The pay is less, but the quality of work is not as good”

False! You can expect to find highly skilled, fluent-in-english, hard-working, dedicated, professional VA’s in the Philippines and all across the world.  If you’ve ever hired a virtual assistant and ended up disappointed, there’s a good chance that 1) your hiring process was not set up to screen out those who were unqualified 2) your onboarding process didn’t include the components necessary to set him/her up for success or 3) when he/she started working for you, there were no systems and processes in place, or, those systems weren’t clear.

A common pricing model for the Philippines would be to start at $5 per hour for a trial week, or a trial month, paid hourly. 

Once hired, if a full time position, the salary would be $200 per week, or $800 per month.

If part time, $100 per week, or $400 per month.

You can read more about why I recommend a salary model over hourly, here.

If you are hiring in the United States, you can find a general virtual assistant for $25-40 per hour. For 40 hours per week, you should expect to pay $1000 per week, or $4000 month.

The cost of living in the Philippines is much less than in the US. Small business owners can leverage the exchange rate to create a win-win for VA and CEO.  If you offer a salary model, and supplement that with generous performance bonuses, holiday bonuses, and profit-sharing, it can be life-changing. The idea is to hire an assistant who will be with you for years, not weeks or months. This is someone who will grow with you, and together, you will grow your business. Over time, the idea is that your VA can be paid the equivalent of a VA anywhere in the world, because your business will have scaled to a level that makes it possible.

Are You Ready to Hire a Virtual Assistant?

What is a virtual assistant?

A virtual assistant is a human being (I’m not referring to Siri, or Alexa, or an operating system akin to what you may have seen in the movie, “Her”). This is a person who works remotely in your business. They could be on another floor in your business, or on the other side of the world.

When I talk about virtual assistants, I’m referring to a generalist. This person will likely have expertise in one particular area, but their role in your business will be broad.  When looking for a specialist assistant, I think more of “project manager”. 

“Am I ready for a VA?”

More often than not, I am inclined to say “yes you are”.

How can that be? How can I be so sure that you are ready when I don’t know you or your business?

Because, when set up correctly,  two heads are better than one. It’s that simple. 

I don’t need to know your revenue  in your business, because you can start with a virtual assistant, part time, for about $100 a week. (If you cannot spare $100 a week in your business, I would argue that you don’t have a business, you have a hobby.)

I don’t need to know what industry you are in, because whether you are B2B, B2C, brick and mortar, or a professor at an ivy league school, a virtual assistant is going to help you get where you need to go, FASTER.

But there are certain things to consider before you take the plunge:

The first and most important question to ask yourself is, “Am I ready to let go of some things?”.

I have a friend who runs an online business who told me that she left her corporate job because she was sick of managing people. She loves being alone in her business. She loves the feeling of freedom that comes with that. She knows her business would grow faster and that she would be more profitable if she hired someone, but to her, it’s not worth it. She’s happy with the slow but steady growth of her business. So obviously, it would not be a good idea for her to hire a VA.

You need to make sure that you WANT the help. That you WANT to share the highs and lows and twists and turns with someone else.

It may be that you’ve hired someone before, but it was more trouble than it was worth. Either they didn’t perform as well as you had hoped, or you spent so much time trying to keep them busy, you didn’t get anything done! You fell into the “might-as-well-do-it-myself” trap. And this is very common.

The good news is, once you make up your mind that you want to hire a VA, the pre-work you need to do ahead of time to set yourself up for success  is not as overwhelming as you imagine. 

You don’t have to have perfectly organized Drop Boxes, meticulous spreadsheets, a content calendar, or a color-coded Trello board.

But you do need to take these next steps: 

1. Define : What is it you need help with most immediately? Social media posting? Email management? Research? If you don’t know what you need help with, you won’t be able to set success metrics for your new VA. Everyone needs to know what success looks like.

Completing the following sentence will help you to hone in on exactly your expectations are: 

I need help with _________(social media management)_________ so that I can___________ (increase new leads by 20% each month)________.

Now that you know why you need a VA and what you want him/her to help you with, it’s helpful to put in place a few systems or processes so that once you hire your VA, they can work without you, or with minimal oversight.  The more you can remove yourself from the process, the better.

Here’s an example of a simple social media management process.

Click here to access our Trello board and make a copy.

Click here access Social Media Management Document.

Here’s an example of a newsletter process/system.

Click here to access our Trello board and make a copy.

Click here to access our newsletter process document.

2. Guide: Often I hear from people who were disappointed with their VAs because they started the journey assuming that once they handed things off to the VA, they could peace out. Not only is this not true, you don’t want it to be true. Guidance is where the magic happens. No, you don’t want to be holding your VA’s hand all day long. Of course not. But with your feedback and guidance, your VA will become a better VA, you will become a better CEO, and your business will become exponentially more efficient and a place where you and your team will thrive for years to come. 

How to give guidance and feedback without eating up all of your time?

3. Weekly team meetings: each week it’s a good idea to have a short meeting via Zoom or Skype to review what’s ahead. My team meets every Monday at 9am EST. Our agenda is always the same: 1) we review the calendar 2) I review our newsletter via screenshare 3) Each person shares anything they need feedback on, or any announcements that the team needs to be aware of. This meeting is usually between 15-30 minutes.

4. A daily shared Google Doc.  This sounds so basic and that’s because it is. Don’t be fooled, though. It’s really powerful.  I share a Google Doc with each of my VA’s. In other words, each VA shares a Google Doc with me that is just for the two of us. 

There are 3 questions on the document:

1. What did you accomplish today?

2. Do you have any questions?

3. Do you have any suggestions?

We always stay inside the one document, and the VA updates it daily and submits it to me at the end of her shift. We are literally on the same page and I’m able to give feedback and guidance without interruption throughout the day. By asking “do you have suggestions”, I am able to tap into hidden talents! The feedback you will receive from this one question can transform your business.

Quarterly reviews. It’s very important to set time aside for your quarterly reviews. Everyone needs feedback to improve. Leave room in this meeting for your VA to give you feedback, too. 

Final thoughts:

You are ready for a VA if you are ready to scale your business by handing over tasks that are keeping you from focusing on the work that only you can do. If you can slow down long enough to create some simple systems and processes before you hire, define what it is you need help with, and give structured guidance to your virtual assistant, you are ready to hire a VA. And remember, you don’t have to have it all figured out at the beginning. Your VA will ideally be with you for years and as time goes by, your business, and your relationship will change and grow and flourish.  It’s a worthwhile journey!

Best Tools, Apps, and Plugins for Entrepreneurs 2021

This is the fourth year in a row that we are offering this epic roundup of the best tools, apps, and plugins for entrepreneurs.

Each Tuesday, in my free online classroom, The Front Row, members submit the tools and apps that help them run their businesses more efficiently.

We've taken those submissions and organized them by category and purpose. We've also made note of the tools we use and love.

Did we leave out one of your favorites? Let us know in the comments.