10 Takeaways on the PPP Loan Forgiveness Application
10 Takeaways on the PPP Loan Forgiveness Application
https://www.accountingtoday.com/list/10-takeaways-on-the-ppp-loan-forgiveness-application
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PPP Rule Refinements & SBA Issues New EZ Forgiveness Application.
Attached is a link to an article detailing PPP Rule Refinements & SBA Issues New EZ Forgiveness Application.
Some of the highlights of recent changes to the PPP Program as I understand them are:
You may elect to report either under the original 8 week or an extended 24 week reporting period if you received your PPP loan prior to June 5.
Under 8 week reporting maximum salary which can be forgiven is $15,385 (100K annual salary divided by 52 weeks a year times 8 week reporting period).
Under 24 week reporting maximum salary which can be forgiven for an owner is $20,833 and for other employees $46,154 (100K annual salary divided by 52 weeks a year times 24 week reporting period). Loans June 5 or later are required to use the 24 week reporting period.
Owners Medical Insurance paid by the company is not able to forgiven.
Payroll costs (including salaries, state unemployment & portion of medical insurance paid for by company) were originally required to be 75% of total forgiveness amount. Rate is now reduced to 60% (Called the Payroll Cost Rule).
PPP loans after June 5 are no set to repay any unforgiven amounts over five years. Loans prior to that date are two years. Interest rate remains at 1%.
Business owners can apply for forgiveness anytime they are ready and if qualify under salaries and FTE safe harbors (do not have to wait until December 31 to submit your application).
You can use the EZ PPP Forgiveness Application if any of the three items below apply:
Self Employed with no employees or S Corporation with yourself as sole employee.
You had employees but did not reduce salaries/wages during the covered period by more than 25% and did not reduce the number of hours worked by employees.
You had employees but did not reduce salaries/wages during the covered period by more than 25% and due to sheltering in place not able to operate at same level of business that existed before February 15, 2020.
Be safe!
FTE Impact on Loan Forgiveness & Documentation for PPP Loan Forgiveness
FTE Impact on Loan Forgiveness & Documentation for PPP Loan Forgiveness
It is my understanding you may choose to either use an 8 week or a 24 week reporting period. If you have used all of your PPP monies for forgivable expenses I suggest submitting your forgiveness request as soon as your 8 week reporting period is completed. However if you have not yet used substantially all of your PPP monies for covered expenses I would suggest considering a 24 week reporting period while keeping in mind the impacts of FTE’s (Full Time Equivalents) through 12/31/2020.
As long as your FTE levels do not fall or you can rehire employees by 12-31-2020 we should not have our forgiveness levels decreased. Please be reminded employees fired for cause and employees to whom we make a bonafide offer who opt not to return to work do not count against you for FTE calculation purposes.
If you have reductions in FTE levels during the covered period, you can consider rehiring employees by December 31, 2020, to help maximize loan forgiveness. If any reduction of FTE’s occurred from February 15 and you fully restore the FTE level by December 31, 2020 to equal or higher than FTE’s as of February 15, 2020, your loan forgiveness will not be reduced by any FTE reduction during the covered period. Please be reminded the FTE reduction and salary reductions impact both the 8 & the 24 week forgiveness amounts.
The CARES Act provided that, to apply for forgiveness, the borrower is required to submit the following documentation to the lender that is servicing the PPP loan.
Documentation verifying the number of FTEs on payroll and pay rates for the applicable pay periods, including payroll tax filings reported to the IRS (Form 941) and state income, payroll, and unemployment insurance filings.
Documentation, including cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered business mortgage obligations/including copy of mortgage, covered lease obligations and rental agreements, covered utility payments and amounts the employer pays towards health insurance (net of any amounts paid by employees).
Thanks and be safe!
The Employee Retention Tax Credit Helps Keep Workers Working for Employers Who Did Not Receive PPP Monies
The Employee Retention Tax Credit Helps Keep Workers Working
Employers can received a credit against their payroll taxes of up to $5,000 per paid employee offsetting the employer’s 6.2% share of Social Security taxes. Those who received a loan under the PPP Program are not eligible for this additional credit.
The credit is calculated as 50% of all qualified wages (including healthcare premiums paid in a given calendar quarter. Maximum qualified wages for all qualified wages is $10K resulting in a maximum credit for any employee $5,000.
https://www.kiplinger.com/article/taxes/T054-C005-S011-employee-retention-tax-credit.html
Business NEWS on The PPP Program
The U.S. House Passed Rules Governing the PPP Program Loan Monies and Debt Forgiveness. Two of the Major Changes Include Extending the Covered Period to 24 Weeks and the Requirement that Payroll Costs be 75% of the Amount Forgiven Being Reduced to 60%.
Hopefully the law will quickly be passed by the Senate and signed by the President.
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