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

[shapsam]

I helped someone apply for EIDL on 04/05, he just got funded.

[aygart]

I helped someone apply for EIDL on 04/05, he just got funded.

Loan or advance?

[sillypainter]

The money comes from Treasury. Thats why congress approved $310 Billion

False. The bank funds it and the treasury forgives it or backs it.

[shapsam]

Loan or advance?

Advance/grant

[AsherO]

False. The bank funds it and the treasury forgives it or backs it.

Backs it means they just cover defaults? If these loans have no interest for a while, the banks are shelling out money for their underwriting commission? That doesn't sound right to me.

[cgr]

Not really. It was approved based on 2019 1099 and 2018/2019 schedule C, not payments made.

I understand, but how do you usually pay yourself? Do you have one account for business and personal? Or do you have separate accounts and you make occasional withdrawals from your business account to your personal?

[jackofall]

Backs it means they just cover defaults? If these loans have no interest for a while, the banks are shelling out money for their underwriting commission? That doesn't sound right to me.

Interest payment is deferred, I believe they accrue.  Not a high percentage obviously. They can sell the loans.

[Dan]

Why are so many more people here getting funded during this round?
I wonder what really happened in round 1...

[AsherO]

I understand, but how do you usually pay yourself? Do you have one account for business and personal? Or do you have separate accounts and you make occasional withdrawals from your business account to your personal?

One personal account...

[Zalc]

From Dime:

Licely 12:24
Good Afternoon Zalc, Dime was one of the first banks to open the application process for the Paycheck Protection Program. Due to the overwhelming response, we are temporarily pausing the program to new applications. With this decision we can devote our full attention to the applications received to date, to ensure timely processing.

[Mordyk]

Why are so many more people here getting funded during this round?
I wonder what really happened in round 1...

Big boys took all the money.  Good thing it came in two rounds, it gives us little guys a chance after the government saw the big corporations took it all first round

[cgr]

One personal account...

That's a toughie... SBA hasn't published much yet on contractor forgiveness- hopefully they do so soon.

[AsherO]

That's a toughie... SBA hasn't published much yet on contractor forgiveness- hopefully they do so soon.

Thanks! I'm hoping there are many people in my situation so I don't fall through the cracks. Being on the line for the full PPP amount (and potentially interest) will make me regret taking the loan.

[zh cohen]

Now the big question is the funding. I was approved by Chase and they have no money issues. I'm thinking how the smaller banks will fund this, they need to go out and borrow money, not sure how that process works, but Dime seems already taking SO long to fund. I also think Cross River doesn't have unlimited funds. Hope they don't fund you after the forgiveness period is over :-)

Banks only can approve loans for the amount of money they have available to lend.

The NY State pension fund invested $50 Million in a bank (Pursuit), so that they would have more money to lend.

[yitz1000]

That's a toughie... SBA hasn't published much yet on contractor forgiveness- hopefully they do so soon.

What loan recipients will do going forward during the forgiveness period is likely what's most important. Probably smart to get a 2nd account opened right away and do things clean. That's the way it should be anyways.

[cgr]

Thanks! I'm hoping there are many people in my situation so I don't fall through the cracks. Being on the line for the full PPP amount (and potentially interest) will make me regret taking the loan.

No interest accrued in first 6 months and no prepayment penalties so as a worse case scenario you just repay the whole thing.

[AsherO]

No interest accrued in first 6 months and no prepayment penalties so as a worse case scenario you just repay the whole thing.

I'm going to be spending the money hoping it gets forgiven...

[cgr]

I'm going to be spending the money hoping it gets forgiven...

Got some details for you:

https://bench.co/blog/operations/ppp-loan-forgiveness/
You are entitled to use the PPP loan to replace lost compensation due to the impacts of COVID-19. However, you are not entitled to use the full amount to replace pay. Eight weeks worth of your 2019 net profit will be eligible for forgiveness.

If you have mortgage interest, rent, or utilities expenses, you must have claimed or be entitled to claim a deduction for those expenses on your 2019 Form 1040 Schedule C in order to claim them for forgiveness.

https://www.nav.com/blog/how-to-apply-for-forgiveness-for-your-paycheck-protection-program-loan-602036/
Owner compensation replacement, calculated based on 2019 net profit … with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit
Payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business mortgage payments);
Rent payments on lease agreements in force before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business rent payments); and
Utility payments under service agreements dated before February 15, 2020 to the extent they are deductible on Form 1040 Schedule C (business utility payments).

[cgr]

Got some details for you:

https://bench.co/blog/operations/ppp-loan-forgiveness/
You are entitled to use the PPP loan to replace lost compensation due to the impacts of COVID-19. However, you are not entitled to use the full amount to replace pay. Eight weeks worth of your 2019 net profit will be eligible for forgiveness.

If you have mortgage interest, rent, or utilities expenses, you must have claimed or be entitled to claim a deduction for those expenses on your 2019 Form 1040 Schedule C in order to claim them for forgiveness.

https://www.nav.com/blog/how-to-apply-for-forgiveness-for-your-paycheck-protection-program-loan-602036/
Owner compensation replacement, calculated based on 2019 net profit … with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit
Payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business mortgage payments);
Rent payments on lease agreements in force before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business rent payments); and
Utility payments under service agreements dated before February 15, 2020 to the extent they are deductible on Form 1040 Schedule C (business utility payments).

Another point I've seen though can't find a source is that for 8/52 of your 2019 Schedule C to be forgiven in lieu of salary, you'll be required to show that you did not have regular income during that time. Something others only have to certify to. (How do you prove that you didn't have something?🤔)

[bubkiz]

FYI I was just told by a banker that there are many loans that were approved but the notifications did not yet go out (including ours b"h).