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

[Mordyk]

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.

+1

[cgr]

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);

No clarity yet on what that means... if it's deductible on Schedule C is it included? So far Schedule C deductions seem to dictate what is considered forgivable and what is not... hopefully we'll get more clarity from the SBA soon.

[aygart]

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[AsherO]

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.

What your accountant says doesn’t matter, it’s all  about what your banks will require for forgiveness in your scenario. They’re the ones who’ll be signing off on it, I don’t think the SBA will be reviewing documents for every single forgiveness request.

[TBD]

Heard now from big heimish company with few hunderd employees, received 2M+ in PPP, returning it due to updated guidelines from SBA. I think in the end they will stay over with a lot of money

[AsherO]

Heard now from big heimish company with few hunderd employees, received 2M+ in PPP, returning it due to updated guidelines from SBA. I think in the end they will stay over with a lot of money

Something add up. Isn’t this designed for them?

[AsherO]

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.

A few dollars? 8/52 is much less than the 2.5x monthly. It’s like 74%. How is that fair?

[cgr]

A few dollars? 8/52 is much less than the 2.5x monthly. It’s like 74%. How is that fair?

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.

[AsherO]

But the healthcare costs suggestion would only work if I told my lender about it when I applied, no?

[ilherman]

Something add up. Isn’t this designed for them?

I guess they probably weren't affected from this situation. Some industries improved sales...

[AsherO]

I guess they probably weren't affected from this situation. Some industries improved sales...

They don’t need to be affected, they just have to verify something vague about economic uncertainty and supporting ongoing business operations.

[ilherman]

They don’t need to be affected, they just have to verify something vague about economic uncertainty and supporting ongoing business operations.

If for example you are a medical supplier and your business sales only went up now, you will have a hard time proving that you were eligible for the loan if you go into audit. So they give it back.

[AsherO]

Try Bluevine. My loan got denied from Chase after waited since 4/26. Today I applied thru Bluevine around 3.45pm by 4.30pm I got approved from SBA and signed the loan documents via docu sign, now awaiting for the fund to arrive my checking account. Amazing experience with bluevine.

Thanks to you and all those who encouraged me to call Bluevine, I got approved today and am already signed and funded (ACH supposedly on the way).

Still have a pending application with Dime who claims I got SBA approval but is dragging their feet with underwriting and a pending application with Kabbage.

[TBD]

Something add up. Isn’t this designed for them?

If they weren't effected too bad and you have no liquidity issues than you aren't eligible

[TBD]

Thanks to you and all those who encouraged me to call Bluevine, I got approved today and am already signed and funded (ACH supposedly on the way).

Still have a pending application with Dime who claims I got SBA approval but is dragging their feet with underwriting and a pending application with Kabbage.

WOW

[beeweegee]

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?

Any thoughts about the second half of the above? Can I open a business account with, say, Chase, and click on Sole Proprietorship (even though I never registered my business in any way, or registered a DBA)? And if so, what am I allowed to call it aside from just my name? 

[aygart]

https://www.wsj.com/articles/sba-veered-from-guidelines-on-small-business-loans-report-says-11588971101

[TBD]

https://www.sba.gov/sites/default/files/2020-05/EIDL%20COVID-19%20Loan%205.9.20_0.pdf
https://www.sba.gov/sites/default/files/2020-05/EIDL%20COVID-19%20Advance%205.8.20_0.pdf

[AsherO]

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.

I think it's still up in the air. Did the SBA release their IFR on forgiveness? If it hasn't come out yet, things might still change.

My guess is, just like approval for the loan, that it will vary by lender. Bluevine is making me hopeful I can get 100% forgiveness if 25% is for qualifying expenses (rent/utilities etc)

https://bluevine.zendesk.com/hc/en-us/articles/360042679731-Loan-Forgiveness-Sole-Proprietors

[AsherO]

Another interesting PPP tidbit/source I didn't see shared here:

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program#section-header-11

As of 5pm today only $187mm of round 2 PPP funds have been disbursed (loans approved). This means 40% of round 2 funds are still available...