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

[moko]

Because you could have gotten (50%) forgiveness on some additional money spent on Utilities, rent, mortgage interest (not principal) above the amount spent on payroll.

no rent or utilities right now...

[zh cohen]

no rent or utilities right now...

I hear. You also could have rehired the hourly employees and you would have come out ahead.

[moko]

I hear. You also could have rehired the hourly employees and you would have come out ahead.

how would we come out ahead? Wouldn't it be a wash?

[zh cohen]

how would we come out ahead? Wouldn't it be a wash?

No. Now you borrowed $100k and will get $50k forgiven. If you would have borrowed $200k you would have the money to rehire everyone and get all $200k forgiven. Basically you would be $50k ahead.

[aygart]

No. Now you borrowed $100k and will get $50k forgiven. If you would have borrowed $200k you would have the money to rehire everyone and get all $200k forgiven. Basically you would be $50k ahead.

Or not rehire and get 100k forgiven and repay the rest.

[joeberg]

Someone gave the accounting department bad advice.

Not so simple. If you let go 50% of your employees, they will only forgive 50% of the money spent on eligible expenses(in your example, $100k).

Not sure if this helps but,
From an email our payroll company sent out:

"Keep Track of Employee Headcount and Salary Levels. For the next eight weeks, if your
average number of full-time equivalent employees per month is less than the average during a
base period, your forgivable loan amount will be reduced. The base period is either (1) 2/15/19
through 6/30/19, or (2) 1/1/20 through 2/29/20. We can help you choose the period that produces
the best result."

[yitz1000]

The following email was sent out to some people who originally applied for PPP via Eastern Union / CrossRiver in the beginning of Phase 1, before Kabbage was in the picture:

Subject: Paycheck Protection Program - Your Application Status Update

We are happy to report that your Paycheck Protection Program (PPP) application has been accepted, processed and assigned a loan number in the SBA’s E-Tran system.

Next Steps
Within the next week, you will receive closing documentation via email. The email will be from Cross River SBA via DocuSign with subject line Documents for your DocuSign Signature. Please follow the instructions within the email to execute your PPP documentation. After we receive your completed closing documentation, your funds will be disbursed within 10 business days.

Thank You
We appreciate your choosing Cross River for your PPP loan, and we look forward to delivering your funding as quickly as possible.

The Cross River Team

[TBD]

Thank you for applying for the Paycheck Protection Program Loan through PayPal. 

We submitted your completed application to the SBA and have received a response from the SBA indicating another provider has already secured a PPP loan for your business/organization. Each business entity can only receive one PPP loan. Therefore, we will not be able to continue the processing of your loan application.

If you do not have an approved Paycheck Protection Program Loan through another provider, please click here to provide your feedback so that we can follow-up as appropriate.

Thank you.

Sincerely,

The PayPal Business Financing Solutions Team

[zh cohen]

Or not rehire and get 100k forgiven and repay the rest.

If he only spends $100k (which is his current payroll cost for 8 weeks), and he has only 50% of the employees, only $50k will be forgiven.

[aygart]

https://www.forbes.com/sites/robertwood/2020/05/02/congress-could-reverse-irs-denial-of-tax-deductions-for-paycheck-protection-expenses/

[aygart]

If he only spends $100k (which is his current payroll cost for 8 weeks), and he has only 50% of the employees, only $50k will be forgiven.

Are you sure it get cut in half twice?

[zh cohen]

Are you sure it get cut in half twice?

Pretty sure but I guess we'll see what the SBA says tomorrow.

[cgr]

Hope anyone who applied early and got approved under this premise won't have issues with forgiveness, that would such for businesses who go on paying contractors expecting to get forgiven, and are left holding the bag.

https://www.sba.gov/sites/default/files/2020-05/Paycheck-Protection-Program-Frequently-Asked-Questions_05%2003%2020.pdf

Question: I filed or approved a loan application based on the version of the PPP Interim
Final Rule published on April 2, 2020. Do I need to take any action based on the updated
guidance in these FAQs?
Answer: No. Borrowers and lenders may rely on the laws, rules, and guidance available
at the time of the relevant application. However, borrowers whose previously submitted
loan applications have not yet been processed may revise their applications based on
clarifications reflected in these FAQs.

[AsherO]

https://www.sba.gov/sites/default/files/2020-05/Paycheck-Protection-Program-Frequently-Asked-Questions_05%2003%2020.pdf

Question: I filed or approved a loan application based on the version of the PPP Interim
Final Rule published on April 2, 2020. Do I need to take any action based on the updated
guidance in these FAQs?
Answer: No. Borrowers and lenders may rely on the laws, rules, and guidance available
at the time of the relevant application. However, borrowers whose previously submitted
loan applications have not yet been processed may revise their applications based on
clarifications reflected in these FAQs.

That’s very vague, it’s very much ambiguous as to whether that applies to forgiveness, in fact forgiveness isn’t mentioned at all.

[cgr]

Another interesting point from https://www.sba.gov/sites/default/files/2020-05/Paycheck-Protection-Program-Frequently-Asked-Questions_05%2003%2020.pdf

Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of
the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower
laid off an employee, offered to rehire the same employee, but the employee declined the
offer?
Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under
Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis
exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue
an interim final rule excluding laid-off employees whom the borrower offered to rehire
(for the same salary/wages and same number of hours) from the CARES Act’s loan
forgiveness reduction calculation. The interim final rule will specify that, to qualify for
this exception, the borrower must have made a good faith, written offer of rehire, and the
employee’s rejection of that offer must be documented by the borrower. Employees and
employers should be aware that employees who reject offers of re-employment may
forfeit eligibility for continued unemployment compensation.

[TBD]

Another interesting point from https://www.sba.gov/sites/default/files/2020-05/Paycheck-Protection-Program-Frequently-Asked-Questions_05%2003%2020.pdf

Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of
the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower
laid off an employee, offered to rehire the same employee, but the employee declined the
offer?
Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under
Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis
exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue
an interim final rule excluding laid-off employees whom the borrower offered to rehire
(for the same salary/wages and same number of hours) from the CARES Act’s loan
forgiveness reduction calculation. The interim final rule will specify that, to qualify for
this exception, the borrower must have made a good faith, written offer of rehire, and the
employee’s rejection of that offer must be documented by the borrower. Employees and
employers should be aware that employees who reject offers of re-employment may
forfeit eligibility for continued unemployment compensation.

[TBD]

 28.Question:  Is a lender permitted to submit a PPP loan application to SBA through E-Tran before the lender has fulfilled its responsibility to review the required borrower documentation and calculation of payroll costs?Answer:  No.  Before a lender submits a PPP loan through E-Tran, the lender must have collected the information and certifications contained in the Borrower Application Form and the lender must have fulfilled its obligations set forth in paragraphs 3.b.(i)-(iii) of the PPP Interim Final Rule.  Please refer to the Interim Final Rule and FAQ #1 for more information on the lender’s responsibility regarding confirmation of payroll costs.  Lenders who did not understand that these steps are required before submission to E-Tran need not withdraw applications submitted to E-Tran before April 14, 2020, but must fulfill lender responsibilities with respect to those applications as soon as practicable and no later than loan closing.

[AsherO]

28.Question:  Is a lender permitted to submit a PPP loan application to SBA through E-Tran before the lender has fulfilled its responsibility to review the required borrower documentation and calculation of payroll costs?Answer:  No.  Before a lender submits a PPP loan through E-Tran, the lender must have collected the information and certifications contained in the Borrower Application Form and the lender must have fulfilled its obligations set forth in paragraphs 3.b.(i)-(iii) of the PPP Interim Final Rule.  Please refer to the Interim Final Rule and FAQ #1 for more information on the lender’s responsibility regarding confirmation of payroll costs.  Lenders who did not understand that these steps are required before submission to E-Tran need not withdraw applications submitted to E-Tran before April 14, 2020, but must fulfill lender responsibilities with respect to those applications as soon as practicable and no later than loan closing.

Paging Dime... when was this posted?

[TBD]

Paging Dime... when was this posted?

First they should disburse the money than you could page them...

[AsherO]

First they should disburse the money than you could page them...

I’m not taking for granted that the bankers verbal assurance that I was issued an SBA means I’m getting a loan through Dime.

Maybe it’s true, maybe I have SBA approval through another lender and they just didn’t get around to notifying me, or maybe I didn’t get any approval at all. We’ll find out soon enough.