Category Archives: Tips

COVID-19 Financial Relief, Education, Tips

EIDL & PPP Interaction Guidance

August 14, 2020 Nancy McClelland Leave a comment

The EIDL has two portions: an advance grant, and a 30-year loan.

The SBA provided guidance recently on the interaction of PPP loan forgiveness with advances on the Economic Injury Disaster Loans (EIDL), in the form of adding three Q&As to its August 11th FAQs.

Many of my clients, as well as countless other small businesses, applied for loans under both the PPP and EIDL programs and received them. For EIDL, they could receive 1) an advance grant (generally measured at $1000 per employee), which in theory was automatically forgiven, and 2) a 30-year working capital loan at an interest rate of 3.75% (2.75% for nonprofits). Applicants could apply for or receive either the advance grant, the loan, or both.

Though the CARES Act does not call for it, and the SBA did not expressly state it, the AICPA began reporting some months ago (presumably based on information received from their regular meetings with Treasury) that the EIDL advance grant would have to be subtracted from PPP forgiveness. There was much disagreement in the CPA world as to whether or not this was indeed the case, as the SBA forgiveness application could be interpreted either way.

However, with these new FAQs, the SBA has put an end to that debate, confirming the AICPA’s position that the EIDL advance grants must be subtracted from PPP forgiveness.

The good news here is that at least these will, in effect, be converted into the PPP 1%-interest loans, rather than the 3.75% EIDL. The bad news is that the PPP loan term is only 2- or 5-years (depending on when the loan was signed), rather than the 30-year EIDL.

Therefore, if you have a large EIDL advance grant (at one point these were capped at $10,000, but there are some out there for more than this amount), and you will be challenged by paying it back, take a look at your PPP loan term. If it is 2 years (for loans prior to June 5), then contact your PPP lender to extend the PPP loan to a 5-year period.

This would be particularly important if the EIDL advance grant was larger than your PPP loan, as in these cases there will be no forgiveness.

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

COVID-19 Financial Relief, Tips

SBA Guidance On Appealing PPP Forgiveness Rejections – Lawyers Only, Please

August 14, 2020 Nancy McClelland 2 Comments

SBA gives borrowers a second chance at forgiveness.

Reported in yesterday afternoon’s issue of Accounting Today, “the U.S. Small Business Administration (SBA) has posted rules about how businesses who have been turned down for forgiveness of their Paycheck Protection Program loans can appeal the decision, and about how forgivable PPP loans interact with the SBA’s Economic Injury Disaster Loans.”

The SBA’s Office of Hearings and Appeals has been charged with PPP loan forgiveness denials, which means CPAs will not be permitted to represent the clients they have helped through the PPP process.

According to Accounting Today: “‘The process is a formal legal process, with representation of the borrower limited to attorneys,’ noted Ed Zollars, a partner in the CPA firm of Thomas, Zollars & Lynch, in a blog post Wednesday for Kaplan Financial Education about the new rules. ‘The special status granted to CPAs to practice before the IRS does not carry over to practice before the Small Business Administration.'”

The interim final rules on this matter take effect immediately, though comments are still being accepted.

“Business that appeal the loan forgiveness denial will need to have a copy of the loan review decision that’s being appealed, a statement about why the decision was erroneous, the relief that’s being sought, signed copies of payroll tax filings filed with the IRS and the state, as well as various federal tax returns and schedules… the SBA also wants the name, address, phone number, email address and signature of the appellant or attorney. The maximum length of the appeal petition should be 20 pages, not including any attachments.”

COVID-19 Financial Relief, Illinois, Tips

Illinois Offers Assistance for Rent, Mortgage Payments

August 11, 2020 Nancy McClelland Leave a comment

New Illinois programs to provide relief to some of the hardest-hit.

If you know anyone who might be in-need of rent or mortgage assistance, these programs are excellent options, but are likely to run out quickly. Please pass along — links to apply are included in the articles.

Daily Herald – Pritzker announces launch of rent, mortgage aid programs

Block Club Chicago – Rent, Mortgage Help Now Available For Illinois Residents Who Lost Money From Coronavirus

From Block Club:

Renters can get a one-time grant of $5,000 paid directly to their landlord to cover missed rent since March and pre-pay through December, or until the money is exhausted, according to the Governor’s Office. The fund is expected to help about 30,000 households.

The Emergency Mortgage Assistance program will also give up to $15,000 to about 10,000 households with mortgage payments that are past due or in forbearance.

Cooperatives, COVID-19 Financial Relief, Education, Tips

Last Chance (For the 3rd Time) for PPP Applications – List of Available Lenders

August 6, 2020 Nancy McClelland Leave a comment

Saturday, August 8th is the last day to apply for Paycheck Protection Program funding.

As a reminder, the program is open to independent contractors, gig workers, sole proprietorships, partnerships, LLCs, S-Corps, C-Corps, cooperatives, and non-profits, among others.

In the August 6th Town Hall, the AICPA listed the following lenders as still being open for new PPP applications:

This recent Forbes article summarizes the current state of the program. If you need assistance calculating the maximum loan based on your type of entity, see this blog post, which links to the SBA guidelines.

COVID-19 Financial Relief, Education, Site News, Tips

SBA Releases Long-Awaited PPP Forgiveness FAQ

August 5, 2020 Nancy McClelland Leave a comment

PPP Forgiveness FAQ released only five days before SBA begins accepting lender applications

I was presuming (in this blog post) that the SBA set an initial date for accepting PPP forgiveness applications of August 10th because surely Congress would have something ironed out before they go on recess, and that these expected legislative changes to the program were the same reason for delaying release of their FAQ (yes, the one they have been promising for the past two months).

Surprise! The SBA FAQ was released late yesterday — I’ll be attending the AICPA Town Hall tomorrow and will post an update afterwards (maybe Friday), but in the meantime, here are the best articles I’ve found on the topic so far.

Journal of Accountancy – New FAQs address PPP loan forgiveness issues
By Jeff Drew

Forbes – SBA Makes Further Changes To PPP Rules In August 4th FAQs
By Alan Gassman

ABA Banking Journal – SBA Releases New PPP Forgiveness FAQs, Lending Data

COVID-19 Financial Relief, Tips

SBA To Begin Accepting Loan Applications Aug 10th

August 2, 2020 Nancy McClelland Leave a comment

The SBA announced a few days ago that they will begin accepting loan forgiveness applications from lenders as soon as August 10th — but don’t be too quick to apply.

The Journal of Accountancy lists many reasons it may make more sense to wait to apply for forgiveness, and this article has been echoed and shared widely by the American Institute of CPAs.

“A big reason for these delays is that Congress is debating a new round of COVID-19 relief, which is expected to include a second PPP initiative more targeted than the first one, said Mark Peterson, the executive vice president who heads the AICPA’s advocacy team in Washington, D.C. Those discussions also may include major changes relaxing the forgiveness requirements for the smallest loans, possibly those up to $100,000 or $150,000.”

(More on the possible forgiveness relaxation in a recent blog post of mine. And more on the PPP as-it-stands in yesterday’s Forbes article by Bruce Brumberg.)

SBA and Treasury are not expected to release the expected 25-question FAQ for which we’ve been waiting for over a month — not before new relief legislation is signed. Congress is trying to finalize this before going on recess August 8th.

COVID-19 Financial Relief, IRS, Tips

Filing Form 7200? Use IRS Dedicated Fax Line

July 28, 2020 Nancy McClelland 9 Comments

From the IRS e-News for Small Business Issue 2020-13 today, a note encouraging businesses to use a new fax line to file Form 7200. The IRS still is ramping up staff and catching up departments post-quarantine, so in order to get your advance payment as quickly as possible, please follow their instructions and use the dedicated fax line.

(If you are working with a payroll company who is filing Form 7200 for you, confirm they are taking care of it — do not simply assume. I’ve already come across two companies so far who won’t do it. Time to switch payroll companies, in my opinion.)

IRS Form 7200 fax line:
Employers use Form 7200 to request an advance payment of the tax credits for qualified sick and qualified family leave wages and the employee retention credit. The employer tax credits for qualified sick leave wages and qualified family leave wages apply to those wages paid from April 1, 2020, to December 31, 2020.

Businesses should fax the completed form to 855-248-0552.

Due to scheduled maintenance, the 7200 fax line will be unavailable from August 7 at 10 p.m. to August 8 at 7 a.m. ET.

COVID-19 Financial Relief, Illinois, Tips

Reminder: Cook County Property Tax Payment Deadline Extended to Oct 1

July 23, 2020 Nancy McClelland Leave a comment

A lot of clients have been reaching out about how to handle the Cook County, Illinois property tax bills that began arriving in mailboxes a few weeks ago — so I just wanted to issue a reminder: although the second installment is technically due August 3, property owners can take until October 1 to pay without any interest charge.

Cook County Treasurer Maria Pappas suggested that property owners should go ahead start making partial payments now — to avoid one big payment on October 1. Any balance due after that date will be charged 1.5 percent per month, as required by state law.

To download a copy of your tax bill or to make a payment, visit www.cookcountytreasurer.com. There is no fee if you pay from your bank account:

Select the blue box labeled “Pay Online for Free”
Search by property address or enter your Property Index Number (PIN) and click “Continue.

You also can download a copy of your bill, check and update key information about your property, such as mailing address or property tax exemptions, and more.

COVID-19 Financial Relief, Education, Site News, Tips

PPP Loans Under $150K May Be Automatically Forgiven

July 21, 2020 Nancy McClelland Leave a comment

On Friday afternoon, July 17, Secretary of the Treasury Mnuchin announced that he would consider recommending to both the IRS and SBA that all PPP loans below a certain amount be automatically forgiven. The PPP loan cap mentioned in the discussion was for all loans under $150,000 (though various lobbying groups have floated other amounts). Loans at this level and below account for 86% of all PPP loans — but only 26% of the funds.

This would allow banks and the SBA to concentrate their reviews on the loans above $150,000 — only 14% of the loans — which make up a whopping 74% of the funds. (Among these large borrowers are the many chains, billionaires, and public companies that arguably were not the “small businesses” the fund was meant to help.)

If this recommendation is made, and if accepted, presumably that would mean that Forms 3508-EZ or 3508 would not have to be filed by the borrower with the PPP lender. Mnuchin did mention that some fraud precaution would need to be involved. We’ll have to wait to learn more.

I’ve been put off by how many of my colleagues have been mining these applications for additional fees (and bragging about it), especially when their small-business clients desperately need all the funds they can get to keep their businesses running. So not only would this move by Treasury aid small business owners, who are already overwhelmed with keeping afloat during a pandemic; as well as lenders, who would be able to spend resources more effectively in examining large loans; but it also would put the brakes on the predatory behaviors of “trusted advisors”.

In light of this exciting new development/ possibility, and the fact that we are still waiting for an SBA/Treasury FAQ — which has been promised for weeks on-end at this point — I have decided to postpone all client meetings and webinars on the topic, to allow for the respective government agencies to provide additional information.

COVID-19 Financial Relief, Site News, Tips

Paycheck Protection Program Application Deadline Extended Through Aug 8

July 1, 2020 Nancy McClelland Leave a comment

UPDATE 7/4: The PPP Extension has been signed into law.

UPDATE 7/1: It has passed the House as well and is expected to be signed by the President today.

Total shock and surprise… out of nowhere, the Senate unanimously passed a five-week extension to the Paycheck Protection Program application deadline, just a few hours before it was set to expire.

According to USA Today:

Sen. Ben Cardin, D-Md., the top Democrat on the Small Business Committee, said on the floor that senators picked August 8th because that’s the end of the Senate’s next work period and lawmakers are hoping to pass the next relief package by then.

Additionally, Sen. Susan Collins, R-Maine, who helped negotiate the initial small business portions of the March coronavirus relief legislation, said that the extension would make certain we “don’t see an interruption in this program” while a fifth relief bill is being negotiated in Congress.

The unanimous agreement Tuesday night was unexpected, as lawmakers have clashed over issues regarding the program, including legislation regarding how to possibly redirect the unused $130 billion.

The deadline had recently been extended for a few specific borrowers who challenged some of the requirements in court and won — but this ruling only applied to those specific instances. However, their challenge pointed out some unfair restrictions in the PPP application requirements regarding criminal records that have since been remedied (though none of the online applications I have seen have incorporated the new rules yet). Given the timing of the recent guidance, there were certainly many would-be applicants that would not have been able to apply, and hopefully this extension will help.

There also is simply a huge amount of money left — $130 billion. There was so much confusion and fear about applying and getting loan forgiveness that the funds didn’t make it to many of the intended recipients; many never even applied. For example, I helped three folks this week who thought the program “didn’t apply to them”. Now that the rules are easier to follow, make more sense, require less work, and are clearer, hopefully small business owners will come out of the woodwork and get some much-needed assistance.

The House is expected to pass the measure and the President is expected to sign it. The bill passed in the Senate by unanimous consent.

The Dancing Accountant