SBA PPP and EIDL Small Business Loans (some money is forgivable)

[AsherO]

Most notably, the SBA said it will accept PPP loan applications only from community financial institutions for at least the first two days when the PPP loan portal reopens.


What are examples of a community financial institution?

What is Cross River bank considered?

Meh, it’s the big banks that have the infrastructure setup to process these loans en masse. Two days is a symbolic nod to small banks that won’t move the needle.

[Deal Guy]

I wonder if the big banks will fully accept applications the same first day as the small ones, but just wont get and give approvals until the 2 days have passed. Rather than simply waiting for the 2 days to pass.

[oldguy]

Any reason to rush and do it right away? in other words, is the funding limited?

[ShimshonK]

Let me expand on this- obviously if you have a 2019 Schedule C you were in operation prior to Feb 15 2020. Now the question becomes are you still in operation? Businesses that have permanently closed are not eligible for PPP.

What if $0 of Schedule C income was made in 2020?
Does that itself disqualify one from taking a PPP loan, or as long as they sign the docs that they're in operation that's good?
Alternatively, one can probably just file a Schedule C that they made a few bucks.

[ShimshonK]

For First Draw and then Second it's not 100% clear yet, but banks are of the opinion that you can go for First Draw, then spend all the funds over 8 weeks (minimum covered period) and then go for Second Draw.
Remember: to be eligible for Second Draw you must have used all First Draw funds (even if it's not yet forgiven).

This is very helpful! I know people who applied too late and missed out on round 1. I updated them about this possibility, as per what you wrote here. Not something I'd thought about.

[TBD]

This is very helpful! I know people who applied too late and missed out on round 1. I updated them about this possibility, as per what you wrote here. Not something I'd thought about.

Those who "missed" round one will probably miss round 2, for the same reason they missed the round 1................

[TBD]

And again.... all those self employed ppl here on the forum, speak with your accountant about the possibility of setting up payroll and employ your spouse in your business as a w-2 employee. If gross receipts of ur business is down 20% Q1 2021 vs Q1 2020 and You pay your spouse 10K in payroll (for real work) you will get back $7,000 and the same is true for Q2. (You can not use PPP funds for it) Its $14,000 easy money.

[AsherO]

How does an unincorporated independent contractor prove they spent the PPP funds from the first draw?

24 weeks forgiveness period was more than enough time to deplete the PPP funds paying themselves at the same rate as 2019, but if you used just one bank account how do you prove that?

[AsherO]

And again.... all those self employed ppl here on the forum, speak with your accountant about the possibility of setting up payroll and employ your spouse in your business as a w-2 employee. If gross receipts of ur business is down 20% Q1 2021 vs Q1 2020 and You pay your spouse 10K in payroll (for real work) you will get back $7,000 and the same is true for Q2. (You can not use PPP funds for it) Its $14,000 easy money.

Keep in mind the $14k is earned and taxable income.

[cgr]

How does an unincorporated independent contractor prove they spent the PPP funds from the first draw?

24 weeks forgiveness period was more than enough time to deplete the PPP funds paying themselves at the same rate as 2019, but if you used just one bank account how do you prove that?

You don't need to prove it. There's no actual requirement to spend it on payroll because just by receiving the funds from the bank to your account it's already yours- you don't need to route it from the business to yourself to make it so.

[Hjay]

Still trying to understand it myself, but does this make sense to you:
Gross receipts of a borrower with affiliates are calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate.

What’s considered an affiliate? Husband & wife filing jointly both making money on a 1099? Or no, specifically all work one person is doing themself?

[hcn0132]

I’m sure this has been discussed but I can’t find it...
 If I got paid through a 1099 but have no corporation, can I get PPP?
Thanks

[AsherO]

I’m sure this has been discussed but I can’t find it...
 If I got paid through a 1099 but have no corporation, can I get PPP?
Thanks

2019 1099-MISC self-employment income makes you eligible for first draw (and potentially second draw) PPP

[cgr]

What’s considered an affiliate? Husband & wife filing jointly both making money on a 1099? Or no, specifically all work one person is doing themself?

It has some really drawn out and complicated definitions but in a nutshell:
Same ownership (50%+),  same controlling parties (CEO, VP, etc),  and close relatives.
The above doesn't automatically disqualify you, just means the rules apply a bit differently.

[AsherO]

You don't need to prove it. There's no actual requirement to spend it on payroll because just by receiving the funds from the bank to your account it's already yours- you don't need to route it from the business to yourself to make it so.

Thanks!

[Hjay]

It has some really drawn out and complicated definitions but in a nutshell:
Same ownership (50%+),  same controlling parties (CEO, VP, etc),  and close relatives.
The above doesn't automatically disqualify you, just means the rules apply a bit differently.

So “close relatives” would mean if my wife & myself work two diff jobs each on our own 1099 we need to show a 25% decline overall between us?

What do you mean, “The above doesn't automatically disqualify you, just means the rules apply a bit differently.”? How would they apply differently?

[Dan]

There's an old story told, supposedly about the original Baron Wissotzky, who founded the tea company.

They say that he was a tremendous ba'al chesed who gave thousands of rubles to tzedakah. He would always have guests in his house and would serve them the most lavish of meals. However, he never served his guests tea.

He would say (perhaps rightly, or perhaps wrongly) - "Tea is my parnassah, and you don't mix parnassah and tzedakah."

Dansdeals is an affiliate-funded site...

Well said.
@cgr certainly does incredible work, but just the hosting bills alone to keep the lights on here cost 5 figures, and that's nothing compared to diaper costs for 5 newborns and toddlers between me and @jj1000

The DD affiliate link for PPP loans can be found here and as always, we deeply appreciate your support: https://www.dansdeals.com/more/coronavirus/pre-applications-ppp-funding-round-2-now-accepted/

[Shua]

And again.... all those self employed ppl here on the forum, speak with your accountant about the possibility of setting up payroll and employ your spouse in your business as a w-2 employee. If gross receipts of ur business is down 20% Q1 2021 vs Q1 2020 and You pay your spouse 10K in payroll (for real work) you will get back $7,000 and the same is true for Q2. (You can not use PPP funds for it) Its $14,000 easy money.

Can you clarify this? Is this the ERC? Would this also work for S corps?

[Dave321]

are people not nervous about having affiliates and getting a piece of the commission? I saw some schools sending out letters that they must use EASTERN UNION for their PPP.

[cgr]

So “close relatives” would mean if my wife & myself work two diff jobs each on our own 1099 we need to show a 25% decline overall between us?

What do you mean, “The above doesn't automatically disqualify you, just means the rules apply a bit differently.”? How would they apply differently?

Correct- although I'm still waiting for an SBA lawyer to get back to me on it to confirm.

Just because you're an affiliate to another company does not automatically mean that you're disqualified from PPP, it just means that you need to follow the affiliate rules (in most cases irrelevant like having less than 300 employees between affiliates) but in this case potentially relevant if you need to calculate a 25% reduction in a quarter, by aggregating gross receipts from all entities.