Author Topic: SBA PPP and EIDL Small Business Loans (some money is forgivable)  (Read 173519 times)

Offline TBD

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2625 on: January 07, 2021, 03:53:52 PM »
@cgr any clarification on this?
https://molentax.com/payroll-tax-deferral-employee-retention-credit-s-corps/#:~:text=And%20as%20you%20know%2C%20the,Employee%20retention%20credit

Code Section 51(i)(1) affects the S corporation shareholder by denying the employee retention credit for wages paid to the following family members of a 50-percent-or-more shareholder:

A child or a descendant of a child
A brother, sister, stepbrother, or stepsister
The father or mother, or an ancestor of either
A stepfather or stepmother
A son or daughter of a brother or sister of the taxpayer
A brother or sister of the father or mother of the taxpayer
A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law
The provision does not prevent the S corporation owner from taking the employee retention credit on his or her wages, provided that the S corporation otherwise meets one of the following requirements

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2626 on: January 07, 2021, 05:16:47 PM »
For Second-Draw loans you can also use a 25% reduction in gross receipts in 2020 as compared to 2019, if applicable (instead of making quarterly cheshbonos)

Offline Ygold

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2627 on: January 07, 2021, 05:58:36 PM »
For a second-draw loan for self employed, private contractors etc; does it work per business? or per individual?

For instance, if the individual owns 2 businesses. Business "A" made more in 2020 than in 2019, (So is ineligible) but business "B" made less in 2020 than in 2019. Can one take a 2nd PPP for business "B", even though when all his personal income is calculated together, he/she made more in 2020?

Also, what would be the benefit of calculating from 2020 income vs 2019?

Also, does the 25% reduction in income work per quarter or annually? Let's say in Q1 it was 25% less, but annually it wasn't a 25% reduction. Or maybe annually the business made more than the previous year, but in Q1 it was 25% less, would they qualify for Second-Draw?
Shout out to Meshugener!

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2628 on: January 07, 2021, 06:06:59 PM »
For a second-draw loan for self employed, private contractors etc; does it work per business? or per individual?

For instance, if the individual owns 2 businesses. Business "A" made more in 2020 than in 2019, (So is ineligible) but business "B" made less in 2020 than in 2019. Can one take a 2nd PPP for business "B", even though when all his personal income is calculated together, he/she made more in 2020?
Still trying to understand it myself, but does this make sense to you:
Gross receipts of a borrower with affiliates are calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate.

Also, what would be the benefit of calculating from 2020 income vs 2019?
If your payroll was higher? Could still be SE relevant because you could have earned more in prior quarters, but then had a reduction of 25% in just a single quarter (might call into question that the "economic uncertainty makes this loan request necessary to support the ongoing operations")

Also, does the 25% reduction in income work per quarter or annually? Let's say in Q1 it was 25% less, but annually it wasn't a 25% reduction. Or maybe annually the business made more than the previous year, but in Q1 it was 25% less, would they qualify for Second-Draw?
According to the rules you can calculate using either, and yes you'd qualify based on a single quarter (again, might call into question that the "economic uncertainty makes this loan request necessary to support the ongoing operations")

Offline Ygold

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2629 on: January 07, 2021, 06:26:51 PM »
Still trying to understand it myself, but does this make sense to you:
Gross receipts of a borrower with affiliates are calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate.

Honestly, the way these things are written, it always makes my head spin. Hard for me to decipher what they mean.

Thanks for the response!
Shout out to Meshugener!

Offline Ygold

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2630 on: January 07, 2021, 06:29:57 PM »
While were on the topic... If a Self Employed took out a PPP loan, first round, and then the business ended up making more in gross sales and profits in 2020 than in 2019, is one still eligible for forgiveness?
Shout out to Meshugener!

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2631 on: January 07, 2021, 06:38:42 PM »
Honestly, the way these things are written, it always makes my head spin. Hard for me to decipher what they mean.

Thanks for the response!

Possible that this only refers to an entity that owns multiple entities, not to an individual. Seeking clarity as we speak, so best not to make assumptions yet...

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2632 on: January 07, 2021, 06:40:40 PM »
While were on the topic... If a Self Employed took out a PPP loan, first round, and then the business ended up making more in gross sales and profits in 2020 than in 2019, is one still eligible for forgiveness?
Forgiveness?? 100%!
The only time you had to have done worse than before is for the Second Draw loan. For the loan itself as long as you were uncertain due to the current situation you're fine- it doesn't turn into a loan just because it's now clear that there was no reason to worry back then.

Online AsherO

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2633 on: January 07, 2021, 06:47:17 PM »
Forgiveness?? 100%!
The only time you had to have done worse than before is for the Second Draw loan. For the loan itself as long as you were uncertain due to the current situation you're fine- it doesn't turn into a loan just because it's now clear that there was no reason to worry back then.

Basically, if you were eligible for your PPP loan when you got it, and spend the money on eligible expenses, it doesnít matter how much money you earned after you were approved for the loan.

This actually makes sense. The point of the loan is to support (payroll-paying) businesses by alleviating some of their payroll burden. If it helps your business survive and thrive, then it served its intended purpose.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2634 on: January 07, 2021, 07:41:04 PM »
New post based on updated guidance now available on my site.

I believe I'll be a tad busy over the next few days/weeks. If you have a question that goes unanswered kindly email me at chaiplus1@gmail.com.

Does this mean you finalized and partnered with a lender? Can you provide a link?

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2635 on: January 07, 2021, 07:45:44 PM »
Does this mean you finalized and partnered with a lender? Can you provide a link?

Iím sure youíll know about it when it happens and the lender is accepting applications :P

That post means there was guidance issued.

Offline cgr

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2636 on: January 07, 2021, 08:05:42 PM »
Does this mean you finalized and partnered with a lender? Can you provide a link?

Yes, but as per forum rules I can't share- in fact this conversation in itself might be a violation of the rules :o.

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2637 on: January 07, 2021, 08:14:28 PM »
Yes, but as per forum rules I can't share- in fact this conversation in itself might be a violation of the rules :o.

Maybe @Dan or @jj1000 will give you special dispensation.
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Offline YitzyS

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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2638 on: January 07, 2021, 08:27:44 PM »
Maybe @Dan or @jj1000 will give you special dispensation.
There's an old story told, supposedly about the original Baron Wissotzky, who founded the tea company.

They say that he was a tremendous ba'al chesed who gave thousands of rubles to tzedakah. He would always have guests in his house and would serve them the most lavish of meals. However, he never served his guests tea.

He would say (perhaps rightly, or perhaps wrongly) - "Tea is my parnassah, and you don't mix parnassah and tzedakah."




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Re: SBA PPP and EIDL Small Business Loans (some money is forgivable)
« Reply #2639 on: January 07, 2021, 09:31:55 PM »
Was there guidance released today by sba regarding ppp and eidl?
Is there a link to the guidance?