PPP ROUND II: Second draw applications open next week (1/19/21)

Here’s the cut and dry info you need to know, thanks to our friend James Hoffman at Lendbase -

• Maximum PPP loan size is 2.5X average monthly payroll costs, up to $2 million.

• Must show at least a 25% drop in revenue in one quarter of 2020 compared to 2019.

• Forgivable expenses now include

  • Supplier costs on existing contracts and purchase orders, including the cost for perishable goods at any time, costs relating to worker protective equipment and adaptive costs, and technology operations expenditures.

  • Additional group insurance payments when calculating PPP payroll costs. This would cover insurance plans such as vision, dental, disability and life insurance.

  • Borrowers receive full loan forgiveness if they spend at least 60 percent of their PPP second draw loan on payroll costs over a time period of their choosing between 8 weeks and 24 weeks.

• Who all qualifies for a second draw?

  • Borrowers who returned all or part of their initially PPP loan to reapply for the maximum amount applicable.

  • PPP second draw as small businesses that have no more than 300 employees and demonstrate at least a 25 percent reduction in gross revenues between comparable quarters in 2019 and 2020.

  • Eligibility expanded to 501(c)(6)s, housing cooperatives, destination marketing organizations, local newspapers and T.V., and radio stations and already includes churches and religious organizations.

• If you plan on applying for a second PPP loan, or your first if you missed out on the first round, we recommend you contact your lender ASAP to talk through lender-specific processes and qualifications.

Related: Payroll tax deferral

our friend’s at haynie & co CPa say don’t take it

As part of President Trump’s recent set of executive actions geared towards helping businesses through the pandemic, the Treasury Secretary will, “defer the withholding, deposit and payment of employees’ portions of Social Security taxes from September 1 through December 31, 2020”.

After studying the relevant executive action, Haynie & Co conclude that there are far too many unanswered questions about the logistics of this filing to deem it a guaranteed net benefit to small business owners. Not to mention, employees will face the burden of increased withholding Spring 2021 to repay the deferral, which employers are ultimately liable for regardless. And yes, interest and penalties apply to unpaid deferrals.

Read up on the details from Haynie themselves here.

PPP: Everything You Need to Know

Eligibility, Use, Forgiveness

NOTE:

WE ARE NOT TAX OR LAW PROFESSIONALS. DO NOT RELY ON ANY INFORMATION ON THIS PAGE WITHOUT CONSULTING WITH YOUR CPA, ATTORNEYS, & LENDERS.

PPP Forgiveness Update!

The Payroll Protection Program has undergone seemingly innumerable changes since its implementation. Most recently, a proposal has gained traction to automatically forgive PPP loans of less than $150,000.00 so long as a recipient submits a one page form. Our friends at Haynes CPA suggest waiting to submit your forgiveness application until further guidance is given after this next stimulus bill passes. Find out more information here.

New PPP Loan Forgiveness Guidelines passed by Senate

As of June 10th, the Senate has passed amendments to the Payroll Protection loan program to ease restrictions and help business whether the COVID-19 pandemic, which continues to drag on despite state re-openings and recent civil unrest.

Major changes of interest include:

• Coverage period extended from 8 weeks to 24 weeks.

• 75% payroll expense threshold has been lowered to 60%.

• New exemptions regarding loan forgiveness eligibility.

• Extension of employee re-hiring period from June 30th to December 31st, 2020.

For a comprehensive explanation of these changes, look no further than this article written by our friends at JDSupra.

New Expense Tracking & Forgiveness Calculation Spreadsheet!

In the wake of these recent changes and distinctions, our friends at Haynie & Company CPA have released an updated expense tracking and PPP loan forgiveness calculation spreadsheet template! An incredible resource for small businesses trying to navigate this process, click the button below to download.

SBA Form 3508

Along with all the necessary accounting and payroll paperwork, in order to apply for PPP loan forgiveness, you’ll need to complete and submit an SBA form 3508. Click the button below to download!

MAXIMIZE YOUR PPP LOAN

Detailed accounting and complete and accurate record-keeping will be vital to taking advantage of these provisions. 

The PPP loan program can be forgiven when applied to qualifying expenses over an 8-week period beginning when the funds hit your account. Click the button below to access a spreadsheet template designed to help organize your qualifying expenses on a weekly basis over the forgiveness period. Courtesy of our friends at Haynie & Company CPA.

Remember, all expenses tracked in the spreadsheet above must be backed-up with payroll reports and invoices associated with rent and other qualifying expenses.

SBA - PayCHECK Protection Program Loan

The Much Anticipated SBA Loan Program Information was released 3.31.20, along with the application for the Paycheck Protection Program (PPP).  We encourage you to connect with your lender for their particular needs and work expeditiously to submit your Information and Application.

As more details are made available, your banks may need additional items to approve and fund your request. But start collecting the below information and forwarding to your lender:

• PPP Application (attached)

• Entity Docs (EIN, Resolution, company agreements <which shows who the officers are and who is authorized to sign on behalf of the company and entity structure>)

• Previous 12 month Payroll Summary Report (including payroll benefits, vacation, healthcare, retirement, etc) as of 2/15/2020 with corresponding bank statement

When can I apply?

• Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.

• Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.

IMPORTANT INFORMATION REGARDING HISTORICAL CARES ACT, SBA LENDING and LOAN FORGIVENESS

~The Federal Government has passed the CARES Act - a historic economic relief package in light of the COVID-19 pandemic. The financial package includes significant relief for small businesses, tenants and landlords including :

• Expansion of SBA’s 7(a) Loan Program to Support New “Paycheck Protection Program” Loans. 

  • The SBA’s existing 7(a) program will see:

    • Increase in maximum loan amount to $10 million

    • Requirements waved: No need to prove credit was previously sought elsewhere. No collateral required for loans less than $200,000

    • Allowable uses expanded to include:

      • Payroll support (including paid sick or medical leave)

      • Employee salaries

      • Mortgage, rent and utility payments

      • Insurance premiums

      • Other debt obligations. 

• Loan Forgiveness

  • Certain borrowers would be eligible for loan forgiveness equal to the amount spent during an eight-week period after the origination date of the loan on:

    • Payroll costs

    • Interest payment on any mortgage incurred before Feb. 15, 2020

    • Rent on any lease in force before Feb. 15, 2020

    • Utilities for which service began before Feb. 15, 2020

The amount forgiven would be reduced in proportion to any reduction in employees retained compared to the prior year and to the reduction in pay of any employee beyond 25% of prior year compensation.

• Qualifying Businesses

  • Businesses with 500 or fewer employees

  • Businesses operational prior to February 15th, 2020

  • Click HERE for a comprehensive list of qualifying entities.

• Loan Forgiveness

  • SBA loans provided via the CARES act will be eligible for forgiveness in an amount equal to the sum of qualifying expenses incurred during the 8-week period commencing on the date of loan approval.

  • Forgiveness will be limited to the actual payment of certain types of permitted expenses actually incurred before the covered period started (February 15th) and paid after the loan was secured.

• Lenders

  • CARES Act loans will be provided by a vastly expanded group of lenders, not just those previously participating in the SBA’s Section 7(a) program.

  • Said lenders will also approve or deny applications for loan forgiveness.

  • The amount of any loan forgiveness will be reduced by any meaningful reductions in employee wages.

  • Loan forgiveness will also be reduced in light of any reduction in employment during the 8 week period following loan approval.

  • Any loan amount not forgiven at the end of one year is carried forward as an ongoing loan with a maximum term of 10 years and a maximum interest rate of 4%.

More information available via our friends at BCLP Law, as well as via Video below - a national small business town hall presented by INC and the US Chamber of Commerce.

The information contained herein was obtained from sources deemed reliable. Beck-Reit Commercial, however, makes no guarantees, warranties or representations as to the accuracy.