jschroeder said:

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Understood, that's basically what I'm asking.

From what I've seen, which is admittedly not much, the main aspects that businesses could benefit from this is SBA loans for businesses that can show they were hurt by this in some way.

We didn't lay anybody off, our expenses have actually gone down, and revenue is now flat year over year instead of the 40% growth we were at during Jan-Feb.

Is there anything beyond SBA loans to this?

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You could likely use the lost revenue to demonstrate the impact of COVID to qualify

We shouldn't know more in the next 15 days

So my accountant said we can not use this loan and have it forgiven to pay for our 1099 employees.

Any differing opinions?

dermdoc said:

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So my accountant said we can not use this loan and have it forgiven to pay for our 1099 employees.

Any differing opinions?

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Probably not, but there may be some help for the 1099s in self employment tax relief.

Also, banks may be offering their own version of disaster loans. We bank with Frost and already have an app in for a special assistance loan.

As per the post directly above, we are using increased payment terms with customers, and potential interruption in revenue as the basis.

For those interested in the basics of the Paycheck Protection Program/CARES Act, this write up seems to be pretty good.

https://www.natlawreview.com/article/paycheck-protection-program-sba-loan-program-expanded-cares-act

Just an Ag said:

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For those interested in the basics of the Paycheck Protection Program/CARES Act, this write up seems to be pretty good.

https://www.natlawreview.com/article/paycheck-protection-program-sba-loan-program-expanded-cares-act

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Thanks. That clearly says 1099 employees are covered as are prorated salaries up to 100k.

THANKS

All,
Thanks for the great information. I have two basic questions:
1) If during this time we provide services for a client pro-bono that would normally pay for them, would we be able to pay our 1099 contractors and apply this funding to their day rates?

2) I don't see specifics on two things for my contract employees:
Per Diem
Mileage
Could someone more familiar with how these are generally characterized identify if these portions of their rates can be included in the program?

Thanks

Just may be nomenclature, but 1099 should be independent, self-directed contractors and not "employees". Referring to them as such and treating them as such could put you on the hook for a whole host of liabilities, including paying payroll taxes for them, overtime, etc.

My only concern on claiming assistance for 1099 contractors would be the potential to open yourself up for an audit or review of contractor vs employee classification. Just my thoughts.

Thanks

Treasury has released the details and Application, submissions start Friday 4/3

https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses

Any thoughts on if guaranteed payments to owners for services rendered would be covered or excluded?

MD1993 said:

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Treasury has released the details and Application, submissions start Friday 4/3

https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses

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That spells it all out.

Thank you.

So it appears after looking at the application, unlike a lot of the summaries predicted you can only include payroll and insurance costs into the number to calculate payroll.

Not rent or utilities as has been speculated.

RGRAg1/75 said:

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AgLA06 said:

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So it appears after looking at the application, unlike a lot of the summaries predicted you can only include payroll and insurance costs into the number to calculate payroll.

Not rent or utilities as has been speculated.

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My interpretation is you can SPEND the $$ on rent & utilities, in addition to payroll, but the amount accessible is driven by payroll.

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I read it as if you spend part of the money on Rent / Utilities, it is expected that only 25% of that part will be approved:

" Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than twenty-five percent (25%) of the forgiven amount may be for non-payroll costs. "

Edited:

Found the following on the other linked page. It looks like no more than 25% of your use should be towards non-payroll costs but it would be "fully forgiven": https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf

"Fully Forgiven Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees"

Premium said:

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RGRAg1/75 said:

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AgLA06 said:

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So it appears after looking at the application, unlike a lot of the summaries predicted you can only include payroll and insurance costs into the number to calculate payroll.

Not rent or utilities as has been speculated.

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My interpretation is you can SPEND the $$ on rent & utilities, in addition to payroll, but the amount accessible is driven by payroll.

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I read it as if you spend part of the money on Rent / Utilities, it is expected that only 25% of that part will be approved:

" Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than twenty-five percent (25%) of the forgiven amount may be for non-payroll costs. "

Edited:

Found the following on the other linked page. It looks like no more than 25% of your use should be towards non-payroll costs but it would be "fully forgiven": https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf

"Fully Forgiven Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees"

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Right. But a lot of the summaries posted thought the total loan amount (2.5x payroll number) would include rent and utilities as well. It appears to not. Only dollars to the employee, local and state taxes, and group insurance.

From the Treasury link:

Quote:

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How much of my loan will be forgiven? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan

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Quote:

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How can I request loan forgiveness? You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments

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Sorry if this has been asked or answered already. I've looked around for guidance, but haven't found it directly addressed.

We have three corporations with three or four offices in each one. I am assuming that we make three separate applications under whichever program we use. My local bank, which is getting ready to not be my local bank, simply guided me to the SBA website when I asked.

I asked that question to my bank and they said to include it in the calculation. They weren't positive but were assuming it would be included

As I work with others on these loans, what is the correct interpretation of the last half of Question #2 on the Paycheck Protection Program Application Form?

Paycheck Protection Program Application

Question #2
Has the Business, any of its owners, or any business owned or controlled by any of them, ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted in the last 7 years and caused a loss to the government?

Specifically, does it mean if a borrower is currently delinquent on an SBA loan they're ineligible? Or is it the delinquency or default must have caused a loss to the government for the borrower to be ineligible? That sentence could be interpreted a couple different ways.

(A or B) + C
A or (B + C)

A - Currently delinquent
B - Has defaulted in the last 7 years
C - Caused a loss to the government

B and C seem way worse than merely being delinquent.

Are they"affiliated"?

Do you have a holding company?

I'll know more tomorrow (i hope) but I'm advising clients to submit for each entity based on a couple different criteria - PM me if you need more help

I'd take that as either can cause a denial.

But a delinquency doesn't necessarily indicate a loss to the USGOV

Are you a lender? I can try to get clarity on that

I'm not a lender. I'm just an accountant trying to assist multiple entities apply.

PM sent.

So i'm looking to "annualize" people who came throughout the year last year, drop off the ones who left, and CAP those making over $100K.

Is my calculation wrong, should I be doing this another way?

1) CAP anyone making over $100K at $100K
2) Do not count anyone who was on payroll last year and are no longer employed
3) For those who started in the middle of last year, or even the end of last year, "annualize" their salary to what it would have been had they worked an entire year
4) If they got a pay-raise go with the pay raise number as the new "annualized" number

Does this make sense?

Bonus question. We pay Insperity for payroll services, can we count this in our calculation of "payroll" in any way?

We have a side business LLC used for consulting. My wife and I are the owners and only employees. I still have my regular 9-5 job. Do we qualify for this?

We are meeting with our banker today to go through this in detail. I have similar questions and should hopefully be able to shed some light this afternoon.

Specifically to your example, it is my understanding that if you use staff (salaried employees, 1099, part-time) as part of your payroll calculations for 2019, and ultimately your available loan amount (2.5x), then you are open to reductions in forgivable amount due to changes in FTE numbers for the 8-week period.

If you aren't trying to forgive the loan, then i would:

• count all payroll from 2019, including those no longer employed
• cap down to $100k on anyone higher
• enjoy your 10-year ~4% SBA loan

If you are trying to forgive the loan:

• cap down to $100k on anyone higher
• decide how much of your 1099, PT and currently unemployed staff you want to count in your calcs from 2019
• look at your average FTE in the multiple scenarios above
• compare that FTE count to your current FTE count (during the 8 weeks). The forgivable amount will be (current payroll*Avg. FTE during 8-week period)/Avg. FTE from 2019. Multiply that by 2.5 and you have the forgivable amount.

We will most likely include salaried and PT, but not 1099 since they fluctuate so much during the year. We should be able to forgive about 96% of our loan.

You bet - I send as many people as I can to a tax advisor b:/c they are better than the bank at picking thru what program is best - PM me and i'll Send you some resources

• Do we know yet if we count payroll taxes in our Average Monthly Payroll?
• I had heard earlier that the forgiven debt would be could possibly be counted as taxable income to the business, any thoughts on that?

Payroll tax is not included in your average monthly calculations (for the loan amount). You can use the loan to pay for payroll tax (amongst other things) but you only use standard payroll amounts to calculate the available loan.

https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final_revised.pdf

Your question on taxable income is one that i plan on asking this afternoon.

Edit: removed, so I dont cause confusion.

Not sure if this is in relation to the above question re: payroll tax, but I am not sure what State & Local includes.

As to what is excluded:

Compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020
2. Payroll taxes, railroad retirement taxes, and income taxes
3. Any compensation of an employee whose principal place of residence is outside of the United States
4. Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 1165 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act

Gotcha. Good clarification. Thanks.

These are the details Im relying on my banker for...but very much appreciate the info posted here.

(going to remove my post, as not to cause anyone confusion)

I could be wrong on all of this, hopefully my discussions this afternoon will help to clarify a lot of it.