Author Topic: SBA PPP and EIDL Small Business Loans (some money is forgivable)  (Read 535690 times)

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1080 on: May 14, 2020, 12:45:55 PM »
someone in the company advised the accounting Dept. to only apply for the amount that we assumed would be forgiven. For example, say the salaried employees added up to $100000 fir 8 weeks of payroll and the hourly employees added up to an additional$100000 for 8 weeks of payroll. The acct Dept only applied for $100000 loan assuming that was the forgivable amount. In reality it seems we should have applied for $200000 and simply returned$100000. My question is , will the whole $100000 that we actually got approved for be forgivable if it is all spent on payroll.

This was just released yesterday:
https://home.treasury.gov/system/files/136/Interim-Final-Rule-on-Loan-Increases.pdf

Some PPP loans were approved to partnerships or seasonal employers before the additional guidance was issued and, as a result, those businesses may not have received PPP loans in the maximum amount for which they are eligible. This interim final rule authorizes all PPP lenders to increase existing PPP loans to partnerships or seasonal employers to include appropriate amounts to cover partner compensation in accordance with the interim final rule posted on April 14, 2020

While the above may not fall into the category of partnerships or seasonal employers, the banks now have guidance on how to increase loans to those that didn't receive as much as they are entitled to. If this is you I suggest you reach out to see what they say.

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1081 on: May 14, 2020, 12:47:09 PM »
The only rent, utilities and mortgage he has is for his personal home and he didn't deduct these expenses on his 2019 schedule C.

Ah. So yes, your calculation seems correct.

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1082 on: May 14, 2020, 12:47:48 PM »
But can he legally deduct a portion? Does he have a office in his home?

I'm not so sure that'll be enough. It says over and over again "to the extent that they were deducted on the 2019 Schedule C".

Offline shapsam

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1083 on: May 14, 2020, 01:18:29 PM »
Ah. So yes, your calculation seems correct.
Thank you

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1084 on: May 14, 2020, 01:19:32 PM »
Roth & Co.'s follow-up email after the webinar asks all the right questions that the SBA hasn't yet answered.

Quote from: The Roth&Co Team
-Can we give raises or bonuses in order to reach the 75% payroll criteria for forgiveness?
-Is overtime pay allowed for employees? Is there a cap on the number of hours per employee based on other pay periods?
-Is an employer allowed to offer incentives to employees to entice them to return to work? Incentive pay has a good chance of being forgiven so long as it was paid during the eight-week period and documented correctly with concrete reasons as to why it was necessary.
-How is Qualified Tuition Reduction considered? This has not been clarified by the SBA. We have reason to believe that this falls under “other fringe benefits,” and would be included as an eligible payroll expense.

How do we determine “incurred and paid” for the purpose of forgiveness?
This would answer questions like:
-If I receive funds on May 15th, can I use those funds to make payroll which covers the preceding 2 weeks?
-Can I pay ahead for benefits (such as medical) in order to maximize the forgiveness?
-Can I prepay my employees for future pay periods?
-Can I accelerate my last payroll (which already incurred) to ensure that it falls in the 8-week period?
-Can I pay a year’s worth of retirement benefits during the 8 weeks?
-Can I pay the previous month’s rent if I haven’t paid it yet?
-Can I pay May’s rent if we received funds on May 7th?

Offline AsherO

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1085 on: May 14, 2020, 01:22:10 PM »
Ah. So yes, your calculation seems correct.

Are you saying that for 1099 PPP borrowers, 8/52 is forgiven even without any additional expenses to get them over 75%?
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Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1086 on: May 14, 2020, 01:27:04 PM »
Are you saying that for 1099 PPP borrowers, 8/52 is forgiven even without any additional expenses to get them over 75%?

My understanding is that you need to have 75% of your loan go to payroll in order to be able to use the other 25% for other stuff. If you use less than 75% for payroll, your forgiveness is reduced. In other words: any amounts used for payroll legitimately (for those 8 weeks, for steady employees etc) is forgiven.

If the guy isn't looking to get forgiveness for the remainder, and he's only looking to spend X amount on payroll I think he'll get forgiveness much easier...

Offline AsherO

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1087 on: May 14, 2020, 01:35:03 PM »
My understanding is that you need to have 75% of your loan go to payroll in order to be able to use the other 25% for other stuff. If you use less than 75% for payroll, your forgiveness is reduced. In other words: any amounts used for payroll legitimately (for those 8 weeks, for steady employees etc) is forgiven.

If the guy isn't looking to get forgiveness for the remainder, and he's only looking to spend X amount on payroll I think he'll get forgiveness much easier...

Let’s say I’m the guy, and I got a $10k loan based on $48k 1099, let’s assume I don’t have an EIDL for simplification. 8/52 of $48k is $7,384.

What do I need for full loan forgiveness?
- $2,500 in qualifying expenses?
- $2,616 in qualifying expenses?
- Something else?
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Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1088 on: May 14, 2020, 01:43:40 PM »
Let’s say I’m the guy, and I got a $10k loan based on $48k 1099, let’s assume I don’t have an EIDL for simplification. 8/52 of $48k is $7,384.

What do I need for full loan forgiveness?
- $2,500 in qualifying expenses?
- $2,616 in qualifying expenses?
- Something else?

That's exactly the question the SBA hasn't answered yet.

Offline AsherO

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1089 on: May 14, 2020, 01:47:44 PM »
That's exactly the question the SBA hasn't answered yet.

Ah, I was under the impression that BlueVine was erroneously telling me they’re waiting to hear back from the SBA.

I’m starting to wonder if maybe I shouldn’t have signed my loan docs so that my funding starts after I know the rules.
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Offline yitz1000

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1090 on: May 14, 2020, 01:49:52 PM »
Roth & Co.'s follow-up email after the webinar asks all the right questions that the SBA hasn't yet answered.

But no answers here either...

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1091 on: May 14, 2020, 01:52:43 PM »
47.Question:An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith.  Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?
Answer:  Yes, SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46.  Borrowers do not need to apply for this extension.  This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.

Offline TravelSER

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1092 on: May 14, 2020, 03:03:47 PM »
They stopped taking applications as of now.

Offline ae123

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1093 on: May 14, 2020, 10:34:20 PM »
I see I'm very late to this. I'd appreciate some help.
Someone who runs a small nonprofit and is also self-employed, would he be able to get EIDL and or PPP grants (or forgivable loans, but not non-forgivable loans)?
If yes, how much for each?
Thank you.

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1094 on: May 14, 2020, 10:42:44 PM »
I see I'm very late to this. I'd appreciate some help.
Someone who runs a small nonprofit and is also self-employed, would he be able to get EIDL and or PPP grants (or forgivable loans, but not non-forgivable loans)?
If yes, how much for each?
Thank you.

EIDL only the grant is forgivable (1k per employee max 10k) and if you get PPP it needs to be deducted so only get it if you're not looking to get PPP. (I don't know that you can get this now)

PPP Loan Amount:
If the non-profit has payroll 2.5X of 2019 average monthly wages
Assuming you have a Schedule C for being self-employed it's 2.5X of your Schedule C divided by 12.

Forgiveness:
Non-profit- spend at least 75% on payroll and 25% or less on rent, utilities, and mortgage interest in the 8 weeks following funding

Self Employed- 8/52 of 2019 Schedule C will be forgiven in lieu of payroll. If you deducted rent, utilities, and mortgage interest on 2019 Schedule C you can spend 25% of your loan for that in the 8 weeks following funding.

Offline zh cohen

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1095 on: May 14, 2020, 10:48:10 PM »
I’m starting to wonder if maybe I shouldn’t have signed my loan docs so that my funding starts after I know the rules.

That's what I'm doing.

Offline zh cohen

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1096 on: May 14, 2020, 10:48:31 PM »
They stopped taking applications as of now.

Who stopped?

Offline ae123

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1097 on: May 14, 2020, 10:54:42 PM »
EIDL only the grant is forgivable (1k per employee max 10k) and if you get PPP it needs to be deducted so only get it if you're not looking to get PPP. (I don't know that you can get this now)

PPP Loan Amount:
If the non-profit has payroll 2.5X of 2019 average monthly wages
Assuming you have a Schedule C for being self-employed it's 2.5X of your Schedule C divided by 12.

Forgiveness:
Non-profit- spend at least 75% on payroll and 25% or less on rent, utilities, and mortgage interest in the 8 weeks following funding

Self Employed- 8/52 of 2019 Schedule C will be forgiven in lieu of payroll. If you deducted rent, utilities, and mortgage interest on 2019 Schedule C you can spend 25% of your loan for that in the 8 weeks following funding.
Thank you very much.

Offline ae123

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1098 on: May 14, 2020, 10:58:54 PM »
Frankly, we don't have the time to figure this all out.
Is there someone that takes care of it for other people?

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #1099 on: May 15, 2020, 01:18:11 AM »
Received today email from Dime banker with some clarifications requests from the underwriter