Author Topic: SBA PPP and EIDL Small Business Loans (some money is forgivable)  (Read 342806 times)

Offline YitzyS

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2280 on: August 07, 2020, 03:32:32 PM »
As a sole proprietor getting "owner compensation" directly to my personal account (I don't have a business account), are there any limitations on how fast or on what I spend the money?

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2281 on: August 07, 2020, 03:35:54 PM »
Aren't they just the middleman between the Fed government and the business? And they just get a fee

And doesn't one need a היתר עסקא if there's יד ישראל ביניהם?
I've been waiting over 5 years with bated breath for someone to say that!
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Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2282 on: August 07, 2020, 03:43:24 PM »
Aren't they just the middleman between the Fed government and the business? And they just get a fee
Dont think so. the 1% interest goes to the bank not to the federal govt. Its just guaranteed by govt. If its forgiven than technically you wont pay any interest, just if they dont have heter iska than maybe you are not allowed to sign the loan agreement

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2283 on: August 07, 2020, 04:48:50 PM »
Two people just told me that they heard there might be a heter iska problem with Cross River (which I guess would include Bluevine). Anyone knows about this?
https://www.crossriver.com/heter-iska
It's owned and operated by frum Jews.
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר Ė יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline ShimshonK

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2284 on: August 07, 2020, 05:21:50 PM »
Any reason not to cancel an open application from one bank (BlueVine) after receiving approval from another (Kabbage)?

More importantly, was anything discussed in this thread regarding what a sole prop needs to do once receiving the funds, to ensure all rules are followed and that it gets fully forgiven?

Offline YitzyS

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2285 on: August 09, 2020, 12:50:46 PM »
As a sole proprietor getting "owner compensation" directly to my personal account (I don't have a business account), are there any limitations on how fast or on what I spend the money?
BUMP

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2286 on: August 09, 2020, 12:51:54 PM »
As a sole proprietor getting "owner compensation" directly to my personal account (I don't have a business account), are there any limitations on how fast or on what I spend the money?

PPP or EIDL?
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline YitzyS

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2287 on: August 09, 2020, 12:53:26 PM »
PPP or EIDL?
PPP, as owner compensation for a self-employed person.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2288 on: August 09, 2020, 01:09:35 PM »
PPP, as owner compensation for a self-employed person.

Based on my understanding there's no restriction, as the forgivable amount (assuming it's all owner comp) doesn't depend on how it is spent. It's a fixed percentage.

I don't believe the same is true for EIDL. Which is why I am trying to find out
Is there a reason not to take an EIDL loan just because I don't currently have eligible expenses? At that cost of money I might find it worthwhile to just sit in an account as a working capital cushion. The interest rate is acceptable for me to have that cushion (and I might find future ways to spend it on eligible expenses).
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2289 on: August 09, 2020, 02:51:03 PM »
Is there a reason not to take an EIDL loan just because I don't currently have eligible expenses? At that cost of money I might find it worthwhile to just sit in an account as a working capital cushion. The interest rate is acceptable for me to have that cushion (and I might find future ways to spend it on eligible expenses).

As long as you're sitting on EIDL money, you might be limited to previous owner compensation and can't give yourself a raise. It's not 100% clear cut because putting in more hours entitles you to more funds but there are limits you need to be aware of.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2290 on: August 09, 2020, 02:53:42 PM »
Interesting, good to see that. I looked up the FAQ wording and it seems like that's the threshhold where they'll trust your certification. I think they still want applicants to certify in good faith, just they won't be enforcing it for those lower amounts.
I have heard people that got approved for hundreds of thousand of dollars returning the money, because they felt they couldn't certify in good faith it was needed.
If they're not enforcing under $2M, how did Lamborghini guy get caught for $1.7M?  :)   (he lied about the companies altogether)

1) he got 4MM in PPP
2) He falsified payroll reports to get $ he wasn't entitled to

Hopefully that's not you.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2291 on: August 09, 2020, 02:59:29 PM »
As a sole proprietor getting "owner compensation" directly to my personal account (I don't have a business account), are there any limitations on how fast or on what I spend the money?

More importantly, was anything discussed in this thread regarding what a sole prop needs to do once receiving the funds, to ensure all rules are followed and that it gets fully forgiven?

Basically there's nothing you need to do and no limitation on how fast you can spend. It's based on your 2019 Schedule C instead of actual payments (unless you want to spend it on other eligible expenses). If you are concurrently on UI and want to stay that way, I suggest you stick to your state weekly limits even though on the PPP end it doesn't much matter.
https://bench.co/blog/operations/ppp-forgiveness-contractors-sole-props/

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2292 on: August 09, 2020, 03:00:12 PM »
Basically there's nothing you need to do and no limitation on how fast you can spend. It's based on your 2019 Schedule C instead of actual payments (unless you want to spend it on other eligible expenses). If you are concurrently on UI and want to stay that way, I suggest you stick to your state weekly limits even though on the PPP end it doesn't much matter.
https://bench.co/blog/operations/ppp-forgiveness-contractors-sole-props/

The SBA did reiterate that partnerships (K-1 1065) must pay themselves to get forgiveness.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2293 on: August 09, 2020, 03:20:42 PM »
As long as you're sitting on EIDL money, you might be limited to previous owner compensation and can't give yourself a raise. It's not 100% clear cut because putting in more hours entitles you to more funds but there are limits you need to be aware of.

How about paying for benefits or pension?
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline meilich

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2294 on: August 09, 2020, 03:32:19 PM »
Is it possible to be on ui and ppp at the same time for someone thatís on a 1099?

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2295 on: August 09, 2020, 03:36:28 PM »
Is it possible to be on ui and ppp at the same time for someone thatís on a 1099?

For NY:
You need to stay below the partial unemployment threshold. You can earn up to $504/week and still be eligible for UI, so you can divide your PPP by 24 and pay yourself over 24 weeks if it's below $504, and still claim UI.
Remember that other income will also affect this calculation and will need to be added to your PPP "paycheck" to confirm that you are still below the threshold.

Same theory applies in NJ with your PWBR.

Note that for those who recently got PPP they don't have 24 full weeks in their covered period, it'll be 20-23 weeks instead.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2296 on: August 09, 2020, 03:38:14 PM »
How about paying for benefits or pension?

Whatever is along the lines of your regular compensation is fine. Adding these benefits now for the first time or increasing them substantially will probably be an issue.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2297 on: August 09, 2020, 06:01:40 PM »
Whatever is along the lines of your regular compensation is fine. Adding these benefits now for the first time or increasing them substantially will probably be an issue.

How about if the benefits were there years ago, but had stopped for several years, would restarting them be a problem?
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2298 on: August 09, 2020, 07:21:59 PM »
I don't think anybody or cgr can answer that question. If you pay your loan back nobody will ever blink an eye, if you don't pay back, anything can come to hunt you.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2299 on: August 11, 2020, 01:26:35 PM »
PPP Forgiveness Calculator now live in the first post in my signature block below.
Hope you guys enjoy :)

Updated version now available.
Includes SBA rules as of 08/04/20 as well as a formula fix to the wage reduction calculations.
If you downloaded a previous version I suggest you get the latest one to make sure your calculations reflect the latest guidelines.