Author Topic: SBA PPP and EIDL Small Business Loans (some money is forgivable)  (Read 61211 times)

Offline beeweegee

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #945 on: May 08, 2020, 12:14:22 PM »
As an independent contractor, my accountant recommended that I open a business checking account (I currently use a personal account for paycheck direct deposits)  and have PPP direct deposited into that account. I can then write myself biweekly checks from that account to my personal account (to provide proof for loan forgiveness).

Any recommendations for a business checking account that would work for this purpose? Chase? BOA? Also, while I'm an (unofficial) sole proprietorship, I don't have a business ID number or name aside from using my own name as the business name. Will banks allow me to sign up for a business account using my own name (perhaps followed by the words Sole Proprietorship) if I haven't registered that business name as a DBA?

Offline YossieW

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #946 on: May 08, 2020, 12:27:02 PM »
I know someone who got approved and funded by Paypal on Monday, received now email from Kabbage that his loan was approved by the SBA... weird

had similar got approved by Kabbage and just recieved an email from Bluevine that my loan was approved after I requested they cancel the application a couple days ago

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #947 on: May 08, 2020, 12:30:39 PM »
As an independent contractor, my accountant recommended that I open a business checking account (I currently use a personal account for paycheck direct deposits)  and have PPP direct deposited into that account. I can then write myself biweekly checks from that account to my personal account (to provide proof for loan forgiveness).

In general it's a good idea to have separate accounts but have your accountant read the rules. Your forgiveness will be 8/52 of your Schedule C and not based on checks you cut.

Offline beeweegee

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #948 on: May 08, 2020, 12:34:49 PM »
In general it's a good idea to have separate accounts but have your accountant read the rules. Your forgiveness will be 8/52 of your Schedule C and not based on checks you cut.
I thought that too. He told me this morning that it will not be based on 8/52, and that checks can be written for the full loan (over the 8 weeks...). He said the schedule C 8/52 was for them to figure out the loan amount, but that once you do in fact get approved, you can use the full loan for payroll if you choose (for an independent contractor). I didn't think this was the case, but he was adamant.

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #949 on: May 08, 2020, 12:45:05 PM »
I thought that too. He told me this morning that it will not be based on 8/52, and that checks can be written for the full loan (over the 8 weeks...). He said the schedule C 8/52 was for them to figure out the loan amount, but that once you do in fact get approved, you can use the full loan for payroll if you choose (for an independent contractor). I didn't think this was the case, but he was adamant.

Have him read these:

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
Quote
f. What amounts shall be eligible for forgiveness?
The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount spent over the covered period on:
i. ....
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...

https://www.uschamber.com/report/independent-contractors-guide-cares-act-relief
Quote
5. Will this loan be forgiven?
Borrowers are eligible to have some or all of their loan forgiven.

How much?
An amount equal to how much you spent in the eight weeks following receipt of the loan for:

Owner compensation replacement, but not to exceed eight weeks of your 2019 compensation up to $100,000 (8/52 of the 2019 net profit up to $100,000)

Offline thebudgetdeals

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #950 on: May 08, 2020, 12:47:38 PM »
I thought that too. He told me this morning that it will not be based on 8/52, and that checks can be written for the full loan (over the 8 weeks...). He said the schedule C 8/52 was for them to figure out the loan amount, but that once you do in fact get approved, you can use the full loan for payroll if you choose (for an independent contractor). I didn't think this was the case, but he was adamant.

f. What amounts shall be eligible for forgiveness? The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount spent over the covered period on:
 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;

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

Please let us know if your accountant has a source..

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #951 on: May 08, 2020, 12:53:06 PM »
Based on these rules it seems that Sole Props/1099 are more likely to have a few dollars unforgivable that will need to be repaid, unlike W2 loans which seemingly will be able to get 100% forgiven more easily.

Offline aygart

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #952 on: May 08, 2020, 12:59:55 PM »
Based on these rules it seems that Sole Props/1099 are more likely to have a few dollars unforgivable that will need to be repaid, unlike W2 loans which seemingly will be able to get 100% forgiven more easily.
If they don't have rent and utilities.
The thing with the hamster is that running on the wheel is actually what it is trying to do.

Offline thebudgetdeals

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #953 on: May 08, 2020, 01:03:02 PM »
If they don't have rent and utilities.
If hey didn't have it by Feb 15 even if they have now...

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #954 on: May 08, 2020, 01:11:00 PM »
If they don't have rent and utilities.

Even if they do they'll probably need to return some, because that's capped at 25%.
If you're calculating 8/52 for Schedule C for forgiveness, but calculated 2.5/12 for loan, you'll have about 1% of your loan leftover that should go towards your 75% of payroll, but is capped and therefore can't be used.

The only way to get around this (I think) is if you have healthcare/other benefit costs that you can include in the 75% but is not part of the 8/52 cap.

Offline thebudgetdeals

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #955 on: May 08, 2020, 01:13:23 PM »
Even if they do they'll probably need to return some, because that's capped at 25%.
If you're calculating 8/52 for Schedule C for forgiveness, but calculated 2.5/12 for loan, you'll have about 1% of your loan leftover that should go towards your 75% of payroll, but is capped and therefore can't be used.

The only way to get around this (I think) is if you have healthcare/other benefit costs that you can include in the 75% but is not part of the 8/52 cap.
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);

Offline thebudgetdeals

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #956 on: May 08, 2020, 01:19:04 PM »
Even if they do they'll probably need to return some, because that's capped at 25%.
If you're calculating 8/52 for Schedule C for forgiveness, but calculated 2.5/12 for loan, you'll have about 1% of your loan leftover that should go towards your 75% of payroll, but is capped and therefore can't be used.

The only way to get around this (I think) is if you have healthcare/other benefit costs that you can include in the 75% but is not part of the 8/52 cap.
What will happen if Schedule C application changes now to W-2 income, will he be able to claim 100%?

Offline beeweegee

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #957 on: May 08, 2020, 01:25:37 PM »
Even if they do they'll probably need to return some, because that's capped at 25%.
If you're calculating 8/52 for Schedule C for forgiveness, but calculated 2.5/12 for loan, you'll have about 1% of your loan leftover that should go towards your 75% of payroll, but is capped and therefore can't be used.

The only way to get around this (I think) is if you have healthcare/other benefit costs that you can include in the 75% but is not part of the 8/52 cap.
Was wondering the same. 8/52 comes out to slightly less than 75% of the loan. If no rent, utilities, or healthcare costs associated with the business, how would one even get to 75%?

Offline aygart

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #958 on: May 08, 2020, 01:28:35 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), 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);

Would this also be for an S-corp owner who recieves a W2?
The thing with the hamster is that running on the wheel is actually what it is trying to do.

Offline thebudgetdeals

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #959 on: May 08, 2020, 01:34:06 PM »
Would this also be for an S-corp owner who recieves a W2?
We all have same question...
No clear guidance on this