Author Topic: SBA PPP and EIDL Small Business Loans (some money is forgivable)  (Read 535809 times)

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #900 on: May 06, 2020, 12:48:53 PM »
Yes, my corp pays me a W-2 salary -- and any profit is a distribution (K-1). Loan amount is based on the 2019 W-2's. Forgiveness and loan amount have different rules, as we all know.
If you had W-2 than I think you can use all for payroll

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #901 on: May 06, 2020, 12:53:00 PM »
Yes, my corp pays me a W-2 salary -- and any profit is a distribution (K-1). Loan amount is based on the 2019 W-2's. Forgiveness and loan amount have different rules, as we all know.

Not sure what the question is... If you had W2 you're the same as any business and your wages + state and local tax will be potentially forgiven.

Offline LAX_Esq

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #902 on: May 06, 2020, 12:58:45 PM »
Not sure what the question is... If you had W2 you're the same as any business and your wages + state and local tax will be potentially forgiven.

Let me try again... The question is about various things I've read about forgiveness being potentially limited to $100K/yr-equivalent for any employee making $100K+/yr. In other words, I've read stuff (not sure if credible) that, if an employee gets >$100K/yr, only $8333/mo ($100K/12) can be forgiven.

My loan is $20,800. I have 8 weeks to spend that money to get it forgiven. If I pay myself $8333/mo for 8 weeks, that's only $16,666. I want to be able to get the whole amount forgiven. The question is whether I can pay myself the remainder as back pay or something, so long as it's within the 8 week period, and I'm still not breaking any such $8333/month rule.

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #903 on: May 06, 2020, 01:11:09 PM »
Let me try again... The question is about various things I've read about forgiveness being potentially limited to $100K/yr-equivalent for any employee making $100K+/yr. In other words, I've read stuff (not sure if credible) that, if an employee gets >$100K/yr, only $8333/mo ($100K/12) can be forgiven.

My loan is $20,800. I have 8 weeks to spend that money to get it forgiven. If I pay myself $8333/mo for 8 weeks, that's only $16,666. I want to be able to get the whole amount forgiven. The question is whether I can pay myself the remainder as back pay or something, so long as it's within the 8 week period, and I'm still not breaking any such $8333/month rule.
You are right. Its even less than $16K. will try to find it

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #904 on: May 06, 2020, 01:11:14 PM »
Let me try again... The question is about various things I've read about forgiveness being potentially limited to $100K/yr-equivalent for any employee making $100K+/yr. In other words, I've read stuff (not sure if credible) that, if an employee gets >$100K/yr, only $8333/mo ($100K/12) can be forgiven.

My loan is $20,800. I have 8 weeks to spend that money to get it forgiven. If I pay myself $8333/mo for 8 weeks, that's only $16,666. I want to be able to get the whole amount forgiven. The question is whether I can pay myself the remainder as back pay or something, so long as it's within the 8 week period, and I'm still not breaking any such $8333/month rule.

Got it.
Rules on forgiveness are still hazy but my understanding is that if you happen to have 3 payroll runs (as per your regular schedule) during those 8 weeks you can count all 3. I did see suggestions that you shouldn't run extra payrolls out of schedule as that could potentially raise red flags.
Note that you can also use 25% or less on rent, utilities, and mortgage interest.

Regarding the exact rules of the 100k:
https://www.sba.gov/sites/default/files/2020-05/Paycheck-Protection-Program-Frequently-Asked-Questions-5-5-20.pdf
7. Question: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value?
Answer: No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:
 employer contributions to defined-benefit or defined-contribution retirement plans;
 payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
 payment of state and local taxes assessed on compensation of employees.


This might also be helpful:
https://gusto.com/blog/business-finance/ppp-loan-forgiveness

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #905 on: May 06, 2020, 01:12:04 PM »
Payroll costs including salary,
wages, and tips, up to $100,000 of
annualized pay per employee (for eight
weeks, a maximum of $15,385 per
individual
),


https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf?fbclid=IwAR35Rl3xCA7M43VREb9JKgeq4_UHYTgt79kjC6_5pF_c9vUrEOFi6Eb_Chk

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #906 on: May 06, 2020, 01:13:27 PM »
8 weeks is less than 2 months thats why its below $16k

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #907 on: May 06, 2020, 01:17:47 PM »
Payroll costs including salary,
wages, and tips, up to $100,000 of
annualized pay per employee (for eight
weeks, a maximum of $15,385 per
individual
),


https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf?fbclid=IwAR35Rl3xCA7M43VREb9JKgeq4_UHYTgt79kjC6_5pF_c9vUrEOFi6Eb_Chk

You left out the important bit...

Payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee (for eight weeks, a maximum of $15,385 per individual), as well as covered benefits for employees (but not owners), including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums)

Regarding the but not owners clause, has anyone managed to get clarification if that means Schedule C only and if on W2 then you qualify as an employee? Of if "owner" means W2 owners as well?

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #908 on: May 06, 2020, 01:24:38 PM »
You left out the important bit...

Payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee (for eight weeks, a maximum of $15,385 per individual), as well as covered benefits for employees (but not owners), including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums)

Regarding the but not owners clause, has anyone managed to get clarification if that means Schedule C only and if on W2 then you qualify as an employee? Of if "owner" means W2 owners as well?
I asked it my accountant few days ago and he told me that he tried to do some research but didnt find anymore info on this

Offline Mordyk

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #909 on: May 06, 2020, 01:31:03 PM »
Yes, my corp pays me a W-2 salary -- and any profit is a distribution (K-1). Loan amount is based on the 2019 W-2's. Forgiveness and loan amount have different rules, as we all know.
i would say your W2 amount for 8 weeks payroll is forgiven and the rest needs to be on other qualifying categories in order for it to be forgiven.  i dont see why this should have different rules
#TYH

Offline LAX_Esq

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #910 on: May 06, 2020, 01:32:49 PM »
Payroll costs including salary,
wages, and tips, up to $100,000 of
annualized pay per employee (for eight
weeks, a maximum of $15,385 per
individual
),


https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf?fbclid=IwAR35Rl3xCA7M43VREb9JKgeq4_UHYTgt79kjC6_5pF_c9vUrEOFi6Eb_Chk

Thanks for finding that -- very interesting. The next paragraph says:

ii. owner compensation replacement,
calculated based on 2019 net profit as
described in Paragraph 1.b. above, with
forgiveness of such amounts limited to
eight weeks’ worth (8/52) of 2019 net
profit, but excluding any qualified sick
leave equivalent amount for which a
credit is claimed under section 7002 of
the Families First Coronavirus Response
Act (FFCRA) (Pub. L. 116–127) or
qualified family leave equivalent
amount for which a credit is claimed
under section 7004 of FFCRA;

How does this part even work? Do I pay myself a draw during these 8 weeks and call it owner compensation replacement?

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #911 on: May 06, 2020, 01:36:13 PM »
Thanks for finding that -- very interesting. The next paragraph says:

ii. owner compensation replacement,
calculated based on 2019 net profit as
described in Paragraph 1.b. above, with
forgiveness of such amounts limited to
eight weeks’ worth (8/52) of 2019 net
profit, but excluding any qualified sick
leave equivalent amount for which a
credit is claimed under section 7002 of
the Families First Coronavirus Response
Act (FFCRA) (Pub. L. 116–127) or
qualified family leave equivalent
amount for which a credit is claimed
under section 7004 of FFCRA;

How does this part even work? Do I pay myself a draw during these 8 weeks and call it owner compensation replacement?

That section corresponds with this:

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).


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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #912 on: May 06, 2020, 01:37:30 PM »
Perhaps this answers the question?
For me it raises some more... What if I had no income in the weeks leading up to PPP so I can legitimately certify the above, but in those 8 weeks business picks up? Does the fact that I lost a few weeks of income and need the cash infusion to keep going cover me? Or the fact that I'm earning in those 8 weeks make me ineligible even though I have a payroll gap (and what I earn in those 8 weeks would cover missed payroll and the PPP would cover the actual payroll of those 8 weeks)?

My thoughts exactly... I don't want to do the wrong thing and take PPP if I'm not entitled to it due to a new salaried job, but I did miss many weeks and "double-dipping" during the 8 weeks is really just covering for missed weeks prior.

How about now you’re okay because you have some saving but the near future is very uncertain as business is non - existent now?


Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #913 on: May 06, 2020, 01:43:08 PM »
Thanks for finding that -- very interesting. The next paragraph says:

ii. owner compensation replacement,
calculated based on 2019 net profit as
described in Paragraph 1.b. above, with
forgiveness of such amounts limited to
eight weeks’ worth (8/52) of 2019 net
profit, but excluding any qualified sick
leave equivalent amount for which a
credit is claimed under section 7002 of
the Families First Coronavirus Response
Act (FFCRA) (Pub. L. 116–127) or
qualified family leave equivalent
amount for which a credit is claimed
under section 7004 of FFCRA;

How does this part even work? Do I pay myself a draw during these 8 weeks and call it owner compensation replacement?
If you are based on W-2 than you should write yourself a check for the $15,385, Gross income. This is only based on Schedule C I think

Offline LAX_Esq

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #914 on: May 06, 2020, 01:46:13 PM »
That section corresponds with this:

So this net profit thing is only applicable to Schedule C self employed folks? It's not clear...

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #915 on: May 06, 2020, 01:49:52 PM »
So this net profit thing is only applicable to Schedule C self employed folks? It's not clear...
I think it is clear. it references to 1.b where they write about Schedule C income. I guess its only for Schedule C Income

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #916 on: May 06, 2020, 01:51:18 PM »
So this net profit thing is only applicable to Schedule C self employed folks? It's not clear...
ii. owner compensation replacement, calculated based on 2019 net profit as described in Paragraph 1.b. above, with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit,



i. Step 1: Find your 2019 IRS Form 1040 Schedule C line 31 net profit amount (if you have not yet filed a 2019 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #917 on: May 06, 2020, 01:51:52 PM »
How long after kabbage shows that you’ve been approved do you receive loan docs to sign?

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #918 on: May 06, 2020, 01:56:19 PM »
How long after kabbage shows that you’ve been approved do you receive loan docs to sign?

My experience:

Yesterday I called in to check what was going on after having the above for a few days. Rep said she'll forward file to supervisor. A few min later I had my loan docs, and a few min after signing they updated account to note that they disbursed the funds to the account selected.

So I suggest you call just to give the process a push.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #919 on: May 06, 2020, 05:57:17 PM »
Are SEP IRA contributions eligible for forgiveness as retirement payroll expenses? Chase counted them for the loan amount.
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