Author Topic: SBA PPP and EIDL Small Business Loans (some money is forgivable)  (Read 231157 times)

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1500 on: June 03, 2020, 08:01:06 PM »
PPP Flexibility Act just passed in the Senate.
IT seems that they passed the same version of the congress bill not their proposed version, So its basically just waiting presidents signature...
I THINK WE CAN GO UPTHREAD AND DELETE 60/40% OR 75/25% OF THE CONTENT, AS ITS NOT RELEVANT ANYMORE :-*

Offline shapsam

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1501 on: June 03, 2020, 08:13:22 PM »
If the 8 week PPP payroll is extended to 24 weeks, does that mean that self employed will get 100% forgiveness?

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1502 on: June 03, 2020, 08:22:04 PM »
‘(8) LIMITATION ON FORGIVENESS.—To re2 ceive loan forgiveness under this section, an eligible
3 recipient shall use at least 60 percent of the covered
4 loan amount for payroll costs, and may use up to 40
5 percent of such amount for any payment of interest
6 on any covered mortgage obligation (which shall not
7 include any prepayment of or payment of principal
8 on a covered mortgage obligation), any payment on
9 any covered rent obligation
, or any covered utility
10 payment.’’; and


https://www.congress.gov/116/bills/hr7010/BILLS-116hr7010eh.pdf

Was noted upthread that there is no limit on prepayments of rent, However only RENT OBLIGATIONS are permitted, while a mortgage you have an obligation to pay, there is no obligation to pay rent for future months before the date, maybe it is excluded from the law, only Mortgage pre-payments were signaled out because an obligations exists already. (A signed contract is considered obligation???)

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1503 on: June 03, 2020, 08:30:32 PM »
‘(8) LIMITATION ON FORGIVENESS.—To receive loan forgiveness under this section, an eligible
3 recipient shall use at least 60 percent of the covered
4 loan amount for payroll costs, and may use up to 40
5 percent of such amount for any payment of interest
6 on any covered mortgage obligation (which shall not
7 include any prepayment of or payment of principal
8 on a covered mortgage obligation), any payment on
9 any covered rent obligation
, or any covered utility
10 payment.’’; and


https://www.congress.gov/116/bills/hr7010/BILLS-116hr7010eh.pdf

Was noted upthread that there is no limit on prepayments of rent, However only RENT OBLIGATIONS are permitted, while a mortgage you have an obligation to pay, there is no obligation to pay rent for future months before the date, maybe it is excluded from the law, only Mortgage pre-payments were signaled out because an obligations exists already. (A signed contract is considered obligation???)


Online cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1504 on: June 03, 2020, 08:42:06 PM »
If the 8 week PPP payroll is extended to 24 weeks, does that mean that self employed will get 100% forgiveness?

Haven't seen any changes to the 8/52 rule.

Offline shapsam

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1505 on: June 03, 2020, 08:44:53 PM »
Haven't seen any changes to the 8/52 rule.
Was the 8/52 rule even in the original bill, or was it made up by the SBA? Being that the rule was based on 8 weeks payroll, shouldn't they change it if payroll forgiveness is extended?

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1506 on: June 03, 2020, 08:47:07 PM »
Was the 8/52 rule even in the original bill, or was it made up by the SBA? Being that the rule was based on 8 weeks payroll, shouldn't they change it if payroll forgiveness is extended?
Actually it was made up by the SBA however it was based on the 75/25% guideline according to the 60/40 change it should be limited to 6/52.... :'( :'(

Online cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1507 on: June 03, 2020, 08:47:42 PM »
Was the 8/52 rule even in the original bill, or was it made up by the SBA? Being that the rule was based on 8 weeks payroll, shouldn't they change it if payroll forgiveness is extended?

The forgiveness extension doesn't increase your funding- that part is still 2.5X of 2019 payroll- you just get to use over a longer period of time. Along the same vein you can "use" your 8/52 over a longer period of time, but it doesn't get increased.

Online cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1508 on: June 03, 2020, 08:48:16 PM »
Actually it was made up by the SBA however it was based on the 75/25% guideline according to the 60/40 change it should be limited to 6/52.... :'( :'(

Lol. Don't give them any ideas

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1509 on: June 03, 2020, 09:44:48 PM »
One big difference in the new Act- you must spend 60% on payroll or else there's no forgiveness at all.

Before spending less on payroll only meant a forgiveness reduction.

Offline shapsam

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1510 on: June 03, 2020, 11:04:22 PM »
The forgiveness extension doesn't increase your funding- that part is still 2.5X of 2019 payroll- you just get to use over a longer period of time. Along the same vein you can "use" your 8/52 over a longer period of time, but it doesn't get increased.
Actually it was made up by the SBA however it was based on the 75/25% guideline according to the 60/40 change it should be limited to 6/52.... :'( :'(
Why do you think it's based on 75/25% (they won't even forgive the 25%)?
I would say it's based on the 8 weeks of payroll, and because it would be difficult to determine current "payroll" for self employed, it's based on 8 weeks of 2019.

Now if you will be able to get forgiveness for more than 8 weeks of payroll, then why shouldn't self employed also get forgiveness for increased weeks of payroll?
« Last Edit: June 03, 2020, 11:08:53 PM by shapsam »

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1511 on: June 04, 2020, 12:22:12 AM »
The 8 weeks were based since the application was 2.5 months of payroll, 75% of it equals approx 8 weeks, now that they extended the term to 24 weeks it still didnt change that he original loan amount was based on 2.5 months payroll

Offline shapsam

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1512 on: June 04, 2020, 12:51:32 AM »
The 8 weeks were based since the application was 2.5 months of payroll, 75% of it equals approx 8 weeks, now that they extended the term to 24 weeks it still didnt change that he original loan amount was based on 2.5 months payroll
Forgiveness is supposed to be for eligible expenses in the 8 weeks from when the funds were received. Now they determined, that the only eligible expenses for SE, is payroll in the amount of 8/52 of 2019 salary, presumably because it's easiest way to calculate self employed payroll for these 8 weeks.

I don't see how it has anything to do with the fact that 75% had to be used for payroll, that seems to be a totally different rule.

Back to my original question, now that eligible expenses will include payroll for 24 weeks, shouldn't they change the eligible expenses for SE to 24/52 of 2019 salary (which would make it 100% forgiveness)?
« Last Edit: June 04, 2020, 12:57:42 AM by shapsam »

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1513 on: June 04, 2020, 01:02:41 AM »
Forgiveness is supposed to be for eligible expenses in the 8 weeks from when the funds were received. Now they determined, that the only eligible expenses for SE, is payroll in the amount of 8/52 of 2019 salary, presumably because it's easiest way to calculate self employed payroll for these 8 weeks.

I don't see how it has anything to do with the fact that 75% had to be used for payroll, that seems to be a totally different rule.

Back to my original question, now that eligible expenses will include payroll for 24 weeks, shouldn't they change the eligible expenses for SE to 24/52 of 2019 salary (which would make it 100% forgiveness)?
For individuals with self-employment income who file a Schedule C, the Administrator, in consultation with the Secretary, has determined that it is appropriate to limit loan forgiveness to a proportionate eight-week share of 2019 net profit, as reflected in the individual's 2019 Form 1040 Schedule C. This is because many self-employed individuals have few of the overhead expenses that qualify for forgiveness under the Act. For example, many such individuals operate out of either their homes, vehicles, or sheds and thus do not incur qualifying mortgage interest, rent, or utility payments. As a result, most of their receipts will constitute net income. Allowing such a self-employed individual to treat the full amount of a PPP loan as net income would result in a windfall. The entire amount of the PPP loan (a maximum of 2.5 times monthly payroll costs) would be forgiven even though Congress designed this program to limit forgiveness to certain eligible expenses incurred in an eight-week covered period. Limiting forgiveness to eight weeks of net profit from the owner's 2019 Form 1040 Schedule C is consistent with the structure of the Act, which provides for loan forgiveness based on eight weeks of expenditures. This limitation will also help to ensure that the finite appropriations are directed toward payroll protection, consistent with the Act's central objective. Finally, 75 percent of the amount forgiven must be attributable to payroll costs for the reasons specified in the First PPP Interim Final Rule.

https://www.federalregister.gov/documents/2020/04/20/2020-08257/business-loan-program-temporary-changes-paycheck-protection-program-additional-eligibility-criteria

Offline yitz1000

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1514 on: June 04, 2020, 02:06:42 AM »
For individuals with self-employment income who file a Schedule C, the Administrator, in consultation with the Secretary, has determined that it is appropriate to limit loan forgiveness to a proportionate eight-week share of 2019 net profit, as reflected in the individual's 2019 Form 1040 Schedule C. This is because many self-employed individuals have few of the overhead expenses that qualify for forgiveness under the Act. For example, many such individuals operate out of either their homes, vehicles, or sheds and thus do not incur qualifying mortgage interest, rent, or utility payments. As a result, most of their receipts will constitute net income. Allowing such a self-employed individual to treat the full amount of a PPP loan as net income would result in a windfall. The entire amount of the PPP loan (a maximum of 2.5 times monthly payroll costs) would be forgiven even though Congress designed this program to limit forgiveness to certain eligible expenses incurred in an eight-week covered period. Limiting forgiveness to eight weeks of net profit from the owner's 2019 Form 1040 Schedule C is consistent with the structure of the Act, which provides for loan forgiveness based on eight weeks of expenditures. This limitation will also help to ensure that the finite appropriations are directed toward payroll protection, consistent with the Act's central objective. Finally, 75 percent of the amount forgiven must be attributable to payroll costs for the reasons specified in the First PPP Interim Final Rule.

https://www.federalregister.gov/documents/2020/04/20/2020-08257/business-loan-program-temporary-changes-paycheck-protection-program-additional-eligibility-criteria

Gosh am I tired of seeing this quote, lol. If I hear about that windfall one more time  >:(

Offline Buruch

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1515 on: June 04, 2020, 06:41:29 AM »
Based on the current rules:

1) Specifically says "to the extent that they were deducted on 2019 Schedule C", so no.
2) That's the whole point of the 8/52- so that there's no allowance for bonuses to SE individuals.

If he only submitted an estimated schedule c , and now revised it when he actually files his return, I don't see why he can't use the new amount for forgiveness. Will it raise flags is another question.

Offline AsherO

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1516 on: June 04, 2020, 07:36:42 AM »
PPP Flexibility Act just passed in the Senate.

And the house? I guess we wait to see what’s inside.

Offline beeweegee

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1517 on: June 04, 2020, 08:18:48 AM »
And the house? I guess we wait to see what’s inside.
The House passed it already...

Offline AsherO

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1518 on: June 04, 2020, 08:39:01 AM »
The House passed it already...

That’s what I thought. Exciting, but I’m not sure what this means for 8/52 people like me, possibly nothing significant, would love to be wrong and hear good news.

Also wondering, if what passed is the 24 week thing, could people on PUA still finish their PPP in 8 weeks and get back on claiming PUA 8 weeks later, or not?

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1519 on: June 04, 2020, 08:50:17 AM »
That’s what I thought. Exciting, but I’m not sure what this means for 8/52 people like me, possibly nothing significant, would love to be wrong and hear good news.

Also wondering, if what passed is the 24 week thing, could people on PUA still finish their PPP in 8 weeks and get back on claiming PUA 8 weeks later, or not?
You can do the other way,
Claim now backpay from Unemployment, PPP you can use after July 31