Planning, Fraud & PPP Loans
Welcome back to another episode of The Chirp! A couple of weeks ago we spoke with a well seasoned and well entrepreneur by the name of Buddy Rathmell. Dedicated to now helping small business entrepreneurs make their mark in the digital world of search discovery, Buddy walked us through his humble beginnings and brought us along on a tale of friendships strengthen but also ruined by lofty expectations. If you have checked out Story 23: Set The Right Expectations already, make sure you tune in.
This week on The Chirp, we explored what happens when your financial goals in life get derailed by circumstances outside of your control. A death, an illness, or even a leaky roof can certainly turn any financial plan into financial ruin, but when a global pandemic comes along, financial unpredictability becomes a way. No stranger to the unpredictability of business, our guest, Rachel Curry walked us through the jaw-dropping struggles she faced in trying to navigate the world of PPP loans. From hopeful to hopeless, listen as we discuss with Rachel all the pitfalls that can arise even in the life of the most financially well-prepared.
This Episode In A Nutshell
We all know that managing your finances is tough. We also know that running a business is tough. But what if you had to manage your finances while also trying to run a self-employed business during a time at which economic activity across the world grinded to a screeching halt? Well our guest this week, Rachel Curry, had to do just that. Having started her career as a freelance writer only months prior to a global pandemic beginning, Rachel spoke with us about the struggles she had to endure to make ends meet during the financial meltdown caused by COVID-19. A sobering story filled with misplaced trust, and hope for a better tomorrow, Rachel shows us the ugly side of what can wrong when you ask for help.
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Audio Transcript of Story 24: PPP Gone Wrong
Hello everyone, Cameron here again with another delightful episode of The Chirp: A Podcast By Pigeon, where we interview fascinating people with fascinating stories about their lives and relationships being affected by money and by loans.
Today I have an awesome episode for you where I interview a talented freelance writer called Rachel Curry. I was introduced to her by my colleagues at Pigeon as she writes some awesome articles for their website and I would strongly recommend checking her out after this episode.
One of the topics that she specializes in is finance which makes her a great guest for us, not just because of her industry knowledge, but also how intricately she can explain how her own personal finance has been affected in recent times.
And Rachel came to us wanting to share her story about how some government funding over the pandemic caused her quite a bit of hassle and also to share what she has learned from her experience.
Rachel brings her expertise, her story-telling, and her financial wisdom to The Chirp today. I hope you all enjoy and do stick around to see how you can get in touch with Rachel. Let’s go.
Brilliant. Rachel, thank you so much for coming on to The Chirp. How are things with you today this morning?
Great. Cameron, how are things with you?
I'm very good. Very good. Thanks for asking. I know you have a very long awkward story that happened to you but before we dive into that can you tell our listeners, a little bit about who you are and what you do?
Sure. My name is Rachel Curry. I'm a freelance content writer and journalist, and I also happen to write for the Pigeon website. So I write about finance and investing, especially impact investing. Very interesting. The story I have kind of relates to being a freelance writer and relying on a government program during the COVID-19 pandemic.
I know that's kind of relevant to all kinds of business owners as well. So hopefully I can let people know that it wasn't always a comfortable process. And if that happened to them, they're not alone.
Alone. I like the use of that word.
Oh absolutely! All the way. And what has given you an interest in personal finance and impact investing? What prompted you to write about that? Where did that area of your life begin?
Well, it started by being a freelance writer and by January 2020, I realized business is a little slow right now.
And I think that as I've progressed in my career, I've realized that's very common for the first month or so of the year. It takes a little while for people to get their projects going. But at the time, I didn't realize that. So I was a little bit stressed about my finances and I knew that I was making a different amount of money every month and I really wanted to feel a sense of control.
So I started listening to a podcast called Bad With Money with Gaby Dunn, which has a really fun approach to money and just understanding the markets and that got me interested. And from there, I just started researching and consuming different forms of media relating to it. And it was very empowering to learn about something that, as a left-handed, creative person, never thought I would be able to understand.
So once I realized that I could figure it out, it just kind of went from there.
Fantastic. And do you think from all of your studies and your research that you have definitely improved things for yourself financially? Because I know as a freelancer, that really hits home with me that every month can be quite a little bit different, in terms of what you're bringing in. That's kind of the life of a freelancer in terms of inconsistent income. Have you managed or are you on the journey to even that out for yourself?
Yeah. So one thing I learned that was really helpful is to segment my money. So before I maybe had one account for everything, and when I was starting my business, I didn't even have a separate business checking account. So now I've an official LLC, a separate business checking account, retirement fund that I'm investing in through my own strategy.
I have a midterm savings fund that maybe I hope to access in like 10 years that has some investments in it. I have an emergency fund in case anything happens now that I can access. So I've got money kind of all over the place now, but it makes me feel a little more comfortable just knowing if there's some money for anything really specific that could happen in my life.
And it made me feel more comfortable, more in control.
Fantastic. Well, this sounds all very positive. But I do hear that you have a less than positive story to share, and I'd love you to tell me and the listeners as well if you wouldn't mind.
Sure. I'm not sure if your listeners are primarily from the United States, but the paycheck protection program loan in the US came out toward the start of the COVID-19 pandemic.
It was originally for small business owners with employees. And then over time they opened it up to independent contractors, such as myself at the time. I did not have an LLC, so I was just a solo entrepreneur, as they say. So yeah, I was reading about it through some of my research, writing for my clients actually.
And I realized I was eligible for this. But I wanted to be certain. So I did speak with an accountant who helped me gather all the information I needed for the application. And I know that we heard this word a lot during the pandemic - unprecedented. But I feel like it's really relevant here because the paycheck protection program had never been done before.
And it was new, not just to people like me who were receiving it. It was also new to the lenders and the third-party FinTech companies who were facilitating these loans to people, basically the small business administration. Contracted all of this out to those companies and the SBA will come in later to forgive them.
And is this a loan that was given out much like other types of loans during COVID where they’re giving you this money, but they do expect it back in some form or another in the future, or was this a simple handout?
So most of the loans ended up being forgiven by the SBA. So basically I was given the loan and then a few months later when The SBA opened up forgiveness, I was able to apply for forgiveness, and they forgave it.
And that was that I never had to pay it back. Some PPP loans weren't forgiven most of the time. This is if they were used incorrectly. There were terms for usage. Primarily for businesses with employees, because one of the terms was you needed to use a majority of the money for payroll.
When you're an independent contractor, the whole business is payroll. So you can kind of just give it to yourself and use it how you please. So it was a little bit different, but the expectation was for it to be forgiven. It was a way to prop up the economy when things were closed down.
So basically I started freelance writing in 2019, and I did go to college for professional writing and journalism. And I had even worked in some staff roles after college for a little while before progressing into the freelance space. When I did go freelance in 2019, I was traveling throughout Southeast Asia.
So I had some money saved up, expecting that I wouldn't be making that much. And the cost of living was low in Thailand and the surrounding areas that I was in. So it was a good opportunity for me to get my feet wet. But honestly, in 2019 my income was like $8,000 for the year. So it wasn't much, but by the time 20, the end of 2020 rolled around, I had made closer to $50,000.
And that number only continued to increase from there, but at the start of the pandemic, things were still in the early stages. It started in what, like March 2020? So I didn't feel fully comfortable with my business yet. And I felt this opportunity for a PPP loan is available to me. I don't see why I shouldn't take advantage of it.
Of course. So the way the PPP loan worked for independent contractors, I'm not super sure if it's the same for small businesses, but in my case, there were two rounds of loans that you may be eligible for. So the first round of PPP loans. You had to be in business on or before February 2020 to be eligible.
And it ended up being about 20% of your revenue for either 2019 or 2020. So by the time I was applying for the PPP loan in 2021, I knew my 2020 revenue was a little bit more and that I barely made anything in 2019. So I decided, okay, I'll select the 2020 revenue. So that way I can just get a little extra padding.
It ended up giving me about $10,600, which was super helpful. I was able to pay myself and contribute to my retirement saving. I bought a new computer monitor. The one I was using was crap from small hand-me-down and really not even connecting properly. I was able to get an office chair for myself; I have back problems.
So different things like that. And I invested in my business in various other ways. So it was super helpful. And then I knew that the second round of PPP loans I was not eligible for, because that required you to make less money in 2020 than in 2019, assuming the pandemic hit your business.
In my case, I made almost no money in 2019. So even though I made more money it wasn't this incredible amount. So yeah, so I just took the first round happily. I knew I wasn't eligible for round two. And so that was that I did - choose to get a loan through a third-party financier.
It was deposited into my bank. I'm not sure I feel comfortable saying the name of the bank, just because it was a contentious few months with them, but I'm comfortable saying that they are in the top 10 largest US banks.
Okay so you got this approved, this PPP loan, but then a third party is the one actually giving you the sum, this bank?
Yes and later on the process requires you to apply for forgiveness through the small business administration or SBA. And if it's an approved lender, who was allowed to be doing the PPP loan process, then it usually went smoothly. And in my case, that's what happened. I had the $10,600 in my account and later on applied to have it forgiven.
And prior to having it forgiven, I had used it in the appropriate ways under the rules, which was literally just to pay myself because I'm a one-woman show.
So you're not showing receipts or anything Are you? For your monitors and things?
No, but I did keep track of everything just in case, and showed how I used the money.
But that wasn't really required in my case because independent contractors only had to use it all for payroll. And from there you can kind of use it how you want.
So by mid-2021, I had the loan forgiven, and I kind of just like wiped my hands of it. I was like, that was great. It worked out well for me.
And then the end of the year came. So I remember this day very clearly because it was Christmas Eve at 5:00 PM. And I was on my way to New Jersey driving on the Jersey Turnpike. Probably shouldn't have been checking my phone at that time, but I saw a little notification come up from my email and it was basically my bank stating my funds were frozen because of fraudulent activity.
Naturally, you cannot call customer service at 5:00 PM EST on Christmas Eve. No one's going to answer. So I thought the timing was a little bit weird because then I was stressed for a couple of days before I could really do anything about it, but I enjoyed my time anyway with family.
My boyfriend and I were kind of hopping back between New Jersey and Delaware, where our respective parents live. So it was already a busy holiday season. By the time Monday rolled around, which was the first day things were open after the Christmas holiday, I decided to call customer service and they basically informed me that I was being investigated for PPP loan fraud and that I would not be getting my money.
And at that time that was my emergency savings account because I had gotten the PPP loan prior to segmenting my business finances and I had already used the PPP loan money. So there was about $17,000 in that account that I had kept in there to pay for any extra taxes owed plus just emergency expenses as a freelancer.
I'm sure you've heard it's best to keep three to six months of living expenses or more, you never know what's gonna happen. So that was my emergency fund and I couldn't access it. They informed me...I was looking for a way to do something now I'm like, instead of waiting around, what can I do to speed up this investigation?
So they said, “You can send us your 2019 and 2020 tax returns”. Naturally, I'm in a different state hours away from where I live. And I know that I hadn't transferred my latest tax return onto my computer. It was just in a folder at home in my closet. And I ended up driving the hours home that day to scan my tax returns.
I was a little freaked out. My boyfriend was a very calming presence at the time, which was great because it was snowing on the way home. The roads were riddled with accidents and I was not the type of person who should be driving at that time. And yeah, it was a very hectic time.
I got the tax returns in just trying to speed up the process because I didn't do anything wrong. And for the following weeks and frankly months, it was just me calling them wondering how things were going. I was able to get some money out because I went to one of the few branch locations, in-person branch locations for that bank in my area, and ended up also being a few hours away.
So that was another day trip. The person, the teller there had actually made a mistake and allowed me to withdraw some of it. And they weren't supposed to do that. But obviously, I'm not going to question them. So I took that money. And then at that point, I was fighting for about $6,000, which is a large chunk of change, for me and for most people in America and the world.
Makes a big difference, especially when you were expecting to have that money available as cash.
Rachel, what was their reasoning for withholding the money? They say it was fraud, but what was the nitty gritty about that fraud? Did they say that your 2019, you claimed that it was larger than it was, or could you just go into that a little bit more detail?
Yeah. So according to the rules of the PPP loan that I followed. Which I found through the SBA website, the official government website, you could use either 2019, or 2020 revenue to determine how much you were going to get.
Because it was an unprecedented program they were able to write their own rules and say, we're only accepting 2019 revenue. And so I tried explaining to them, but that's not how it works. However, because their corporation. Publicly traded, but also privately held from the government. They were able to make up their own rule for that.
And I think there might have also been a little bit of confusion because I did not have an LLC when I applied for and received the funding. And then about five months later, I decided to form an LLC. So there was a change in business, but that didn't impact my eligibility for the program in any way, because sole member LLCs are equally as eligible as independent contractors.
So I think there was just frankly confusion about how the PPP loan program worked and also companies trying to make their own rules about it that impacted individuals. And I know that there have been studies that came out recently about problematic results of the PPP loan. For example, large corporations were getting millions of dollars and then there was a lot of fraud that ended up being caught.
But a lot of it was legitimate small business owners, just trying to get the assistance that was offered to them.
So, do you mind me asking how it all ended? So as you say, this went on for a few months, Is there sunshine at the end of the rainbow in this story?
There is. But also I would say I ended up more radicalized against large institutions. So I did kind of burn out after a couple of times trying to communicate with them. It wasn't good for my mental health. I needed to take a couple of weeks off from trying to contact this bank and going through the customer service loopholes.
So eventually I started contacting them again, really nothing came of that, but then one day, four months after I lost access to the money, I just happened to check my account and the freeze was removed. And the first thing I did was withdraw that money and transfer it to another bank. And when that went through, I realized they must have realized they were wrong in their understanding of the program.
But to avoid some sort of lawsuit, they were not going to tell me that they were wrong or even inform me that the money was available to me. So I just figured that out on my own, took the money out and it all worked out in the end. But the entire time I was honestly gaslit by a large corporation that I felt unable to fight.
I felt it would be futile to try to litigate this company with 400 billion in assets under management as someone who is missing $6,000. So it was a really unfortunate circumstance. And fortunately, I was able to make my tax bill on time, but I would say barely and I did have to re-configure my emergency funds and figure out new account situations.
It was definitely a wrench in things for a few months there, but I'm just happy to be on the other side.
Absolutely. What is more attractive to you financially about being your own boss and looking after things yourself, and taking responsibility for yourself, as opposed to maybe working for a corporation or another company as a writer? What appealed to you to go out as a freelancer?
So freelancing for me has a lot of benefits. I would say it's financial, mental, emotional, all those things on the financial side. Staff writer roles at in-house companies do not pay very well. You'd be hard-pressed to find those that would give you more than enough money. And I think with freelancing, you are able to give yourself raises on a regular basis by setting your own rates.
You're able to select companies that are willing to pay you what you're worth. And when you work for projects that are paying you for what you worth, the quality of those projects really shows because everybody's happy to be doing it. There's no resentment involved. And I also am the type of person that as much as I like control, I kind of thrive in a bit of a chaotic environment.
I did really well. Like one semester when I took 18 credits, worked at the newspaper, and worked 20 hours at a part-time job, while in college. And sometimes freelancing is like that. I don't get bored and there's nothing worse than getting bored.
And the future as well will you be a freelancer forever?
Will you start your own company and hire other freelancers? Or how do you see, not the immediate future, but your future as a writer or a freelance writer financially? Where do you think it'll take you?
I was surprised and happy last year to break the six-figure mark.
And so far this year, I'm on track to do that again, my goal this year wasn't to make more money. My goal was to make the same amount of money with less time. And so far that's kind of working, I go through stints, like right now is quite busy, but I have noticed I am working less in the evenings, which is really great.
I’ve spent more time kayaking this summer because I could take off for a little bit, some afternoons. I'm also setting goals that are more like getting my name out there. So that way I don't have to work as hard marketing myself. I’m going to my first conference next month. So I feel like my goals aren't necessarily financial at this moment.
In the long term, I would like to be able to support myself with part-time writing hours and use the rest of the time to maybe write a book or just some sort of growth opportunity that I don't really have time for right now.
Yeah, absolutely. Well, it's good to be busy anyway. I suppose Rachel if people want to get in touch with you and hire your services, or just learn more about you, or to hear your story again, where would be the best place to get in touch with you?
Sure you can connect with me on LinkedIn, my name is Rachel Curry. You can also find me on Twitter @WritingsOfRach. And my website is writingsofrachel.com. So all the information you need is on there.
Fantastic. Listen, Rachel, it was delightful to have you on The Chirp and to hear your story.
And I'm glad that at the end of the day, it all worked out for you and you know, it was nothing short of a learning experience, but it's great to hear your wisdom about how you're so on top of things with your money as a freelancer and how, even though this horrible situation happened to you, you did come out smiling under the side. So I appreciate you chatting to me today.
Of course, we all have to ‘adult’ somehow at some point!
At some stage, yeah! Okay well, best of luck, Rachel, thank you so much.
Thanks, Cameron. Bye!
As a fellow freelancer, Rachel’s story was a bit uncomfortable for me, especially thinking about when I started off. Every penny counts and to get some assistance during the pandemic only to have everything seized is a scary, scary thought indeed.
From the get-go, I realized Rachel was great with her money. How she segmented her accounts, how responsible she was with how she spent her PPP on her business costs. She’s on the ball. Something that definitely contributed to her meteoric rise to success. Her income after 3 years of being a freelancer is most impressive!
But still, that can’t help you when the banks decide to unlawfully freeze your account! What can one person do when they are being wrongfully accused by a financial institution? How does one person take on several, sometimes when that group doesn’t have a face, just an unreliable customer service phone line?
Don’t get me wrong, I believe banks have their place and we’ve discussed this before on the Chirp, but in this instance with Rachel, I don’t think that they were there for her. They weren’t on her side. Rachel got screwed over and it took months to sort it out. How can anyone, after hearing that story, believe that their money is safe in the hands of a big bank?
This is life-changing stuff that happened to Rachel. With no money available, money that you rely on, your mental health will suffer, your quality of life will decrease and, if necessary, you will have to ask for help.
Now thankfully, Rachel didn't have to. As someone who is so on the ball with their finances, she probably didn’t need to. But it’s good to know that those options were there for her. If something bad happens to your money, like a bank seizing all of it, It’s good to know in this day and age that asking for help financially is only a text message away.
That’s all of this week. Be sure to check out Rachel’s website for her work, where she writes about the environment and local stories as well as finance. I’ll be back in 2 weeks with another episode. Hope everyone is loving their summer and I hope to see you all back here again next time. Take care!