Tag Archives: financial relief

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

How To Apply for PPP Forgiveness (Loans $150K Or Less, No Employees/ Non-ERC-Eligible Companies)

July 1, 2021 Nancy McClelland Leave a comment

From the PPP forgiveness guide at – https://bench.co/blog/operations/ppp-loan-forgiveness/

For over a year I’ve been answering the question, “when should we apply for PPP Loan Forgiveness?” And for over a year I’ve been responding, “not yet; there’s still so much that’s up in the air” — as AICPA (thankfully) recommended we wait for legislation from Congress as well as guidance from both the SBA and IRS.

Well, on June 24th, they gave us the green light in the AICPA Town Hall Series. Lisa Simpson said that if you have worked out the interplay between PPP and the Employee Retention Credit (ERC), then you should go ahead and apply.

This means that if you are a sole proprietor or partnership and have no employees, you are ready to apply — since ERC is only an issue if you have W-2 employees or are a W-2 employee of your own company.

(Of course, this means that if you do qualify for ERC and you haven’t worked out the interplay yet, you should consider holding off for now — consider using my recommended approach to moving forward with PPP Forgiveness without jeopardizing ERC, highlighted in a recent blog post.)

So… now what?

For borrowers of $150k or less who are self-employed with no employees:

For self-employed with no employees, it’s an “owner compensation replacement” approach, which means you will have 2.5 months’ worth of your 2019 net profit automatically forgiven. That is why the form is so simple. Your forgiveness amount should exactly equal your loan amount, presuming the original loan was calculated properly.
For reference, here is the forgiveness application form – but most lenders will have you actually apply through their own loan portal, which will walk you through the process. Just be clear that you are a self-employed individual with no employees, that your loan was $150k or less, and so you qualify for Form 3508S.
The best instructions I’ve read are here: How to complete Form 3508S for Self-Employed Individuals with no Employees | SCORE
It should not matter how long you select for your covered period — anywhere between 8 and 24 weeks — but the first- and second-draws cannot overlap (your first loan covered period must be short enough that it ends before your second loan covered period starts).
You can indicate that you spent the entire loan on payroll.
Have your original PPP loan application and loan documents handy so you can make sure the info on your forgiveness application matches it exactly (legal name, DBA, address, NAICS code, EIN/SSN, loan number, number of employees at time of loan application).

And according to AICPA Funding Partner, Biz2Credit, on today’s July 1 webinar (from their PPP Forgiveness Required Documents Customer Guidebook):

(This had been the case for all the lenders I’ve seen so far, but the jury seemed to still be out for some of them, including Biz2Credit — so this was a relief.)

For self-employed folks with no employees, the PPP Forgiveness process should be very straightforward, from everything I’ve seen so far. Please let me know in the comments if you come across challenges, so others can learn from your experiences. Best of luck to you all!

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. Ths 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, Education, IRS, Site News, Tips

Client Options for Claiming The Employee Retention Credit (ERC)

June 19, 2021 Nancy McClelland Leave a comment

Note to readers: the issue outlined below only applies to 50%-or-greater shareholders — which means the business is a corporation — and their spouses who work at the company. It does not apply to sole proprietors or partners — those two groups do not get paid via payroll and therefore are not eligible. Shareholders who own less than 50% are eligible if the business meets the other requirements to claim the credit.

If you are a 50%-or-greater shareholder and your company qualifies for the Employee Retention Credit for either 2020 or 2021, please read on.

I truly cannot believe that it’s June 2021 and I’m writing a blog post to help people choose the least-worst 2020 Employee Retention Credit interpretation — because even though the pandemic is starting to show in our rearview mirrors, we are still living in a universe totally devoid of IRS guidance on the topic of ERC shareholder eligibility. Accountants jokingly refer to this mystery as the Tax Advisers’ “Area 51” on #TaxTwitter.

What am I talking about? And why am I so annoyed? Let me set the scene:

1) Many small business owners are eligible retroactively for the 2020 Employee Retention Credit (ERC), and the IRS decided that the corresponding reduction in wages for that credit needs to be on the 2020 tax return.

2) However, the company’s Paycheck Protection Program (PPP) Forgiveness application needs to be prepared before calculating the amount of the ERC, in order to maximize the amount of financial relief the client receives between the two programs. Therefore, at our firm, these returns are all on extension while we run these calculations.

3) Now that the first round of PPP loans are nearing the end of the payment deferment period — and to be fair, we’re also only a few months away from the tax return extension deadline — we would like to finalize those calculations and returns. (Reminder: there is no “deadline” for applying for PPP Forgiveness — per the SBA, “borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.”)

4) The catch is — that the IRS has still not released guidance on whether or not 50%+ owners of a corporation are eligible for the credit (or their spouses who work for the business). Accountants are split down the middle on what the existing legislation, which is extremely unclear, tells us on the topic. As such, we either need to take a position or continue to wait for IRS guidance.

What’s that? You’re saying the IRS has still not issued essential guidance on a credit that was created in the first month of the pandemic? Yes. Yes, I am.

Recently, both the AICPA and Tony Nitti, two of my most trusted sources, have weighed in on this with a big “why is the IRS dragging their heels on this” reaction. Nitti went as far as to say, “Are wages paid to greater than 50% owners eligible for the credit? If I had a nickel for every time someone emailed me this question, I could afford to stop shamelessly and relentlessly shilling this newsletter. It is absolutely amazing that a full year after the ERC was created, we still don’t have a definitive answer.”

Okay, enough backstory. As a small business owner, what are your options? I call them Choice 1 (yes) and Choice 2 (no) for short:

#1 Calculate ERC as if owners are eligible and file 2020 income tax returns accordingly. This would result in a higher tax for clients (because more wages are disallowed as deductions). Submit PPP Forgiveness applications, but hold off on submitting ERC claims (941-Xs) until guidance is released. If guidance indicates that owners are eligible, file the ERC claims accordingly. If guidance says owners are not eligible, then amend the income tax returns and file the ERC claims accordingly.

This approach may make the most sense when there are two 50%-owners on payroll, and not many other other staff — as the increased credit would be worth the wait, compared to the total credit without owners.

#2 Calculate ERC as if owners are not eligible and file 2020 income tax returns accordingly. This would result in a lower tax for clients (because fewer wages are disallowed as deductions). Submit PPP Forgiveness applications, and submit ERC claims (941-Xs) — rather than holding off on these as in the above option. If guidance is eventually released that indicates owners are not eligible, then no action is needed. If guidance indicates that owners are eligible, then decide whether it is worth amending the income tax returns and ERC claims to get the additional funds.

This approach may make the most sense with only one 50%+ owner and many employees, as the cost to amend all returns and claims will probably not be worth the additional credit.

The goal with both approaches is to get PPP Forgiveness applications and tax returns filed as soon as possible, with the best balance between wage deductions and potential wage credits.

While I was tempted to pick one of these two approaches and inform all clients of our choice, I decided — especially with advice from an AICPA Town Hall — that this is a decision that each client needs to make for themselves. We’re happy to explain the potential costs and benefits of each approach and make a personal recommendation for each client’s individual situation, but the decision should be theirs. We recommend other CPA firms take a similar approach.

COVID-19 Financial Relief, Education, IRS, Tips

2020 Employee Retention Credit FAQ

June 18, 2021 Nancy McClelland Leave a comment

I recently received a few questions based on earlier blog posts, discussions with colleagues, and Slack conversations, and thought it might be helpful to readers to share them all here.

Q: I attended the Compass seminar you recommended and it was super-helpful. I noticed that she didn’t have anything on row 30 of her 941-X, but on the other example we discussed, there were Line 30 entries on her 941-X that was generated by Gusto. Should I have something on line 30?

A: The Compass seminar presenter made a couple mistakes and they issued corrected pdfs afterwards – if you took the course, make sure you have the file called “Corrected_Forms_941-X_for_Case_Study.pdf” to refer to as you are preparing amended 941s to claim the Employee Retention Credit.

The first correction was that column 4 on the 941-X should be negative (even though that math makes no sense on the face of the form).

The other correction was that Lines 30 and 31 are blank in their original examples and should have totals on them. In the seminar, they had entered amounts on the Worksheet 1, Step 3, Line 3a (and 3b if there was health insurance), but then I think they just forgot to also enter them on the face of the form. (In the Worksheet it says these numbers come from Form 941, Lines 21 & 22 – and those correspond to Form 941-X, Lines 30 & 31.)

We built our own Excel version of Worksheet 1 to make all these calculations easier — not hard to do: just copy the last page of the IRS Form 941 instructions, paste into Excel, and set it up to do the simple math. We also made the following notes in Step 3:
a) For Step 3a, “This data will come from the ERC spreadsheet Total Wages row 20 (make sure to add Q1 + Q2 when preparing Q2). Enter on 941-X line 30.”
b) For Step 3b, “This data will come from the ERC spreadsheet Total Benefits row 21 (make sure to add Q1 + Q2 when preparing Q2). Enter on 941-X line 31.”.
c) For Step 3d, “Enter on 941-X line 27 *make sure amount in column 4 is a negative.”
d) For Step 3h, “Enter on 941-X line 18 *make sure amount in column 4 is a negative.”
e) For Step 3i, “Enter on 941-X line 26 *make sure amount in column 4 is a negative.”

Q: Let’s say your PPP2 window is March 1 through August — it sounds like you’re not required to use wages from March 1-31 for your PPP2 forgiveness? You can take all of 1Q 2021 towards ERC and then use wages from April 1 and beyond for PPP2 forgiveness?

A: Yes, exactly – what we are doing in our firm is this: we calculate the minimum amount of wages + health insurance that are needed for PPP – and we use SUTA and retirement first, so that we use as few actual wage + health insurance dollars as possible (because ERC doesn’t use SUTA & retirement). That gives us a “target” that we use in our ERC calculations.

Then we assign wages + health insurance for the PPP period to each employee so as to maximize what’s left over for ERC. The difference has been really amazing, and worth the extra work.

So rather than picking wages to use for ERC based on which quarter they’re in to make it easier for filing, we’re picking them based on what maximizes the amount for ERC.

But the point is — that you can do it however you want, which was the second-to-last big piece of guidance I needed to make this system work to my clients’ advantage the most. (The other piece, whether 50%+ shareholder-EEs count for ERC, is something we’re still waiting on the IRS for. No one can believe they haven’t shared this yet.)

Follow-up question: Where did we land if we have to use every employee for the same duration for PPP forgiveness? So let’s say in the 24-week window you only need 13 weeks to get to forgiveness if you’re including everyone. Instead, could you use 3 employees for 24 weeks and then 2 employees for just 8 weeks (as an example off the top of my head). Or do you have to use all 5 employees for 13 weeks, or whatever it takes? Because in option 2, you’d have 3 extra weeks for the lower paid employees to use for ERC. If that makes sense what I’m asking.

A: There’s no requirement for PPP on a per-employee basis – it’s just a total dollar amount. Amazingly flexible. This analysis is accurate.

Q: The Compass presenter mentioned something about the more than 50% shareholder and whether those wages count. I’ve got two clients who have employee shareholders, and I hadn’t really considered this yet. Do I count their wages?

A: We don’t know! We’re helping clients decide what to do on a case-by-case basis, using this approach (I wrote this up for RRF but it’s still valid for anyone who’s left):
Restaurant Revitalization Fund: Client Options for Tax & ERC Filings | The Dancing Accountant

Follow-up question: Regarding the Shareholder wages— Let me see if I understand it. I have a C-corp where one employee was the founder and basically has 90% of the stock. Is it a question as to whether he counts? And his wife works there as well. So it sounds like either way I cannot include her? Another employee has 10% of the stock. So he counts for sure, right?

A: The 10% employee counts for sure, and we don’t know about the 90% C-corp owner or the spouse that works there, which is why I’m making my clients choose Option 1 or 2 in the blog post I referenced. By coincidence, they reiterated in today’s AICPA Town Hall that we still don’t freaking know the answer here.

Q: What date do I date the JE for “ERC Receivable”? Is it the last date of the quarter for that 941X? (Rather than the date I send the amendment.)

A: Yes, because the IRS decided to be massive jerks and require this to be subtracted from deductible wages in the year of the payroll, rather than the year of the amendment, even for cash-basis tax filers.

Personal rant: after the past two tax seasons, have to admit that I hate Chuck Rettig with a passion.

Q: So if I do form 941Xs, do I need to also send 7200s? Or is that an either/or situation? We definitely want refunds (not just applying refund towards future payments.)

A: No, the Form 7200 is only for advance payments — you would file it to get an advance payment of the refund before the end of the quarter in which you qualify. Once the quarter ends, you claim the credit on the Form 941, and reconcile the amount you’ve already applied to receive in advance. By all accounts I’ve heard, it’s not worth the trouble.

Q: Finally–if I do the 941x’s myself, then do I need to notify that particular payroll company what I’ve done?

A: Not according to Gusto, because it only affects the cash paid, not the liabilities or reported amounts. It’s treated as an overpayment that will be refunded, so it doesn’t change things on their end — but I’m not sure about other payroll companies.

COVID-19 Financial Relief, Tips

Restaurant Revitalization Fund Update: What To Expect Next

May 13, 2021 Nancy McClelland Leave a comment

Excerpt from SBA email informing an applicant that their application for the RRF was approved.

The Journal of Accountancy reported on May 10th that, “a week after opening the $28.6 billion RRF, the U.S. Small Business Administration (SBA) said late Monday afternoon that it had begun sending out more than $2 billion in a first round of funding to restaurants, bars, and other eligible applicants.”

For the first 21 days the SBA will prioritize reviewing applications from small businesses owned by women, veterans, and socially and economically disadvantaged individuals.

After the first 21 days, the SBA will fund all eligible applications on a first-come, first-served basis. Approved applicants should expect an average of 14 days for processing, review, approval, and funds distribution.

So what will this approval look like for you and your clients? The SBA will send an email with the subject “SBA Restaurant Revitalization Fund – Congratulations – Award Approved”. Enough phishers are out there that it pays to be careful, and so some recipients have ignored it because it seems too good to be true, or were suspicious of the no-reply@sba.gov email address. Remember that the SBA will not ask you for any information or provide a link for you in this email. Do not click on any links. If you have any questions, please contact the SBA’s RRF call-center support at 1-844-279-8898. The are available Monday-Friday, from 8 am – 8 pm ET.

When you log into the SBA’s RRF portal that you registered for before applying — restaurants.sba.gov — you will see, on the left-hand side, a “Status” tab. If your application was approved, it will list your award amount, SBA Number, and application status will say “SBA Decision (Approved)”.

The SBA will process the funding of the award directly to the bank account you provided during the application. Again, do not enter any bank information — this was verified during the application process and the SBA will not ask you for it again. If you have any concerns, please call their support line at 1-844-279-8898. The award will be funded within seven business days of the email notification — check your bank account as the final confirmation that this is real.

Make sure to use the restaurants.sba.gov portal to check your application’s status and monitor any messages from the SBA. They will send an email if they have any issues funding the award, but if you are worried about phishing or the message going to your spam folder, the portal and the call center are resources you can access.

UPDATE: For those not yet in the approval stage: it may appear that your application has reverted to a previous step. Please don’t panic — if more information is needed to process your application, you will receive a note directly from the SBA with an email ending in @sba.gov.

In yesterday’s Journal of Accountancy, they noted that the RRF program received 266,000 applications seeking a total of $65 billion, far more than the $28.6 billion Congress allocated the program. As a result, it has less than half the money needed to fund the existing requests.

“Unless Congress passes legislation providing the RRF with fresh funding, the program looks certain to provide the vast majority of its funding to eligible businesses owned by women, veterans, and socially and economically disadvantaged individuals. The American Rescue Plan Act, P.L. 117-2, which created the RRF, mandated that those businesses, which have submitted 147,000 applications totaling $29 billion, receive priority review for the first 21 days of the program,” the Journal notes.

The SBA said it would keep the RRF application portal open for now, because it still has some portion of funding set aside for eligible establishments with 2019 annual revenue of not more than $50,000.

After the first 21 days, the SBA will fund all eligible applications on a first-come, first-served basis, which is why it was so important to submit on Day One.

UPDATE: The Independent Restaurant Coalition released a fact sheet late this afternoon outlining what’s next and it deserves a read.

COVID-19 Financial Relief, Education, POS - Point of Sale, Tips

Restaurant Revitalization Fund: Are You Ready?

May 2, 2021 Nancy McClelland Leave a comment

It’s almost here! The SBA Restaurant Relief Fund will begin accepting applications on Monday, May 3 at 11 am Central Time. Are you ready? What should you be doing to prepare?

To our surprise, the SBA announced last week that all eligible restaurants should apply the moment the portal opens on Day One, regardless of whether they are in the priority groups or not. Those not eligible for review in the first 21 days will be time-stamped and reviewed first-come-first-served in the following period. Therefore, if you are a restaurant owner of any type, make sure to take these steps between now and Monday morning if you haven’t already. Don’t wait until the portal opens to get started — be prepared in advance!

First, calculate your potential grant amount to make sure you are eligible. Do not include state and local Covid-19 grants, or PPP funding, in “gross receipts”. For my clients, I recommend you use “gross receipts minus returns and allowances” on Line 1c (Line 3 for Schedule C filers) of your business tax return. The financial relief, by contrast, should either be on the “Other Income” line (state & local grants), or not entered at all (in the case of PPP), as they are considered non-operating income. Ask your tax preparer if you are unsure.

Follow the instructions in this chart to estimate your RRF grant amount. If you were in business prior to 2019, use Calculation #1 — this will be the vast majority of restaurants.

If the amount is less than $1000 (or negative), you are not eligible. Although it’s frustrating that funding will not be available, at least you don’t have to go through the rest of the steps — silver lining!

Presuming your result is $1000 or more, please take the next steps seriously. Funding for this program is not sufficient for the number of applicants. This is your chance to be ahead of the game.

Watch a recent SBA webinar that walks you through the registration and application process.
Review this short, handy step-by-step guide.
Download and review screenshots from the portal.
Register for an SBA RRF Portal account (unless you are applying through your Square/Toast POS). Do not wait until the program opens to register — the system opened up for registration this past Friday at 8 am Central.
- Note: you will need a cell phone to get a Two-Factor Authentication code; this is required when setting up an account.
- This registration is independent of any other SBA account you might have — the RRF portal is a separate website/login.
- Bookmark this site and make sure you have everything you need to easily log in when the program goes live.
If applying through your Square or Toast Point of Sale (POS) system, familiarize yourself with their guidelines. We recommend you only use this option if 1) nearly all of your gross receipts run through the POS; or, 2) your 2020 tax return is not available.
Read the SBA RRF Program Guide.
Read the definitions for “priority groups” (women-owned, veteran-owned, socially-or-economically-disadvantaged individual-owned) — especially for those with more than one owner — to determine if you can self-certify or not.
Download and fill out the sample application.
- You will need to know things like your business entity type, tax ID #, PPP Draw 1 & 2 loan numbers, bank ACH info, owner percentages and tax ID #s, and your very first day of sales.
- As mentioned above, if you were in business prior to 2019, you should use Table 1 and ignore Tables 2 and 3.
- Use this filled-out application as your cheat-sheet when filling out the online application when the system goes live.
Make sure you have all your supporting documentation saved to a single, easily-accessible folder on your computer, and that you have clearly named each file. Acceptable file formats are: PDF, JPG, GIF, TIFF or PNG.
- Preferred proof of gross receipts decline will be your 2019 and 2020 tax returns (unless you are applying through Square/Toast).
  Your 2019 tax return and your 2019 & 2020 POS reports are also acceptable, though they may not include all your gross receipts, so we recommend using tax returns if you have them.
- In addition, you may need the most recent three months of bank statements for the account that will be receiving the grant money, if the “auto-connect your bank” option does not work for some reason.
- Clarity, precision, and organization is what’s important — not volume. Remember that a real human being will review the application at some point. Feel free to include a cover page that explains how you have organized things and what is where, the naming structure, etc.

If you have everything ready-to-go, it should only take 20-25 minutes to complete the application online when the system goes live.

Tips and notes:

Use the most modern browser possible — the current version of Chrome, Edge or Safari.
There are hover-tips practically everywhere on the portal that are really helpful, as well as an excellent searchable “KnowledgeBase” in the lower-right-hand corner of the website.
The SBA recommends you use the “auto-connect your bank” option instead of manually entering your ACH info — it will move through the process much faster and you will not need to upload three months of bank statements. You will be asked to select which of the bank accounts (if you have more than one) to link.
When signing, make sure your Title fits the entity type. (e.g., “Owner” rather than “CEO” for a sole proprietor).
Digital signature via Docusign at the end — if it doesn’t work, make sure your antivirus is disabled or try another browser.
There’s going to be personally-identifying info (PII) during registration and/or signing to make sure you are the person you say you are, so make sure to fill this return out yourself, rather than have your CPA or anyone else do it. Feel free to have them help you prepare the application that you will use for reference ahead-of-time instead if you need assistance.
You will get a confirmation ID. Please take a screenshot of this page.
If you realize afterwards that you made a mistake, call the call center and they will delete your application and you will have to start over.
The SBA will send a message through the portal’s message center if there are follow-up questions. You will receive an email each time there is a message; you do not need to log back in until you get a status notification, but it might be a safe thing to do in case something gets stuck in spam.
You can reach the SBA RRF call-center at 1-844-279-8898 for any issues or questions.

And finally… a few words to set expectations: I have every confidence that the SBA RRF portal servers will go down at some point. Instead of asking non-priority applicants to wait three weeks, they are asking literally every eligible restaurant in the country to apply at the same moment. The SVOG site went down on the first day and it took weeks for them to re-open it — and there are far more restaurants out there than performance venues. Obviously the SBA learned from that experience, so I am hopeful they are addressing these concerns… but it seems a staggered, time-stamped approach would have been safer. All that said, just do what the SBA recommends and apply in the first few minutes, but do not be surprised if you have to click “refresh” all day long. Maybe don’t make any other plans for the day just in case. For up-to-the-minute info, check twitter — either search for RRF or #RRF — this was an amazing community for the SVOG folks to come together for information and support when their issue occurred.

Good luck, everyone!

COVID-19 Financial Relief, Education, Illinois, POS - Point of Sale, Tips

Restaurant Revitalization Fund: SBA Portal Opens 4/30/21 & Goes Live 5/3/21

April 27, 2021 Nancy McClelland Leave a comment

Big news from the SBA that was summarized very well by both the Independent Restaurant Coalition and the National Restaurant Association.

Today, the Small Business Administration announced that Restaurant Revitalization Fund applications will open at 11 am Central Time on Monday, May 3, 2021.

To prepare to apply, please visit restaurants.sba.gov this Friday, April 30th after 8 am Central Time to create your account. We encourage you to register on Friday and submit your application on Monday.

The portal website will be restaurants.sba.gov. We suggest bookmarking this page now for use on Friday and Monday.

Please watch the 90-Second Advocacy Update with Sean Kennedy for a great overview of what’s next. (Spoiler alert: it’s closer to three minutes long.)

The SBA has provided many resources to help you prepare — links for training, recordings, a sample application, and more. Please see below (some info is from the national office and some is from Illinois; mind the time zones).

In preparation, qualifying applicants should familiarize themselves with the application process in advance to ensure a smooth and efficient application. Follow the steps below.

Register for an account in advance at restaurants.sba.gov starting Friday, April 30 at 9 a.m. EDT. If you are working with Square or Toast, you do not need to register beforehand on the application portal.
Review the sample application, program guide and cross-program eligibility chart on SBA COVID-19 relief options.
Attend one of the webinar trainings listed below. These will be recorded and later posted on SBA’s YouTube channel. We will share the recording links via email and on SBA’s social media channels.
- Wednesday, April 28 | 1 p.m. EDT | Register here
- Wednesday, April 28 | 2:30 p.m. EDT | Register here

For more information, visit sba.gov/restaurants.

COVID-19 Financial Relief, Education, POS - Point of Sale, Tips

Restaurant Revitalization Fund: Free Webinar 4/27 – Walk-Through SBA Application

April 20, 2021 Nancy McClelland Leave a comment

Cafe Mustache, Logan Square, Chicago, IL

Restaurant Revitalization Fund (RRF) Update:

A trusted colleague’s firm released an excellent blog post on recent SBA guidance for the Restaurant Revitalization Fund that I encourage you all to read and share.

They are also offering a free webinar the morning of Tuesday, April 27th to walk through the draft application. I recommend registering if you are available at that time.

Apparently, certain Point of Sale systems will be working with the SBA to create online portals to help their restaurant-customers apply with existing POS data. Keep an eye out for anything from your POS provider on the topic.

We continue to prioritize finalizing ERC/PPP calculations for restaurant clients and will be reaching out soon to each of our clients with this information.

COVID-19 Financial Relief, Education, Tips

Restaurant Revitalization Fund: Sample Application Released 4/17/21

April 18, 2021 Nancy McClelland Leave a comment

From the National Restaurant Association, April 17th:

The SBA just released a sample application for the Restaurant Revitalization Fund (RRF) and a program guide.

The SBA has not announced when they will begin accepting applications – today’s release is a sample application and guide so that restaurants can review and prepare.

We have reviewed early drafts of the application and discussed them with the SBA. Our FAQ document, released earlier this week, reflects this.

The link to the SBA RRF page is here. We are organizing regional and national briefings with our state partners and you’ll be hearing more from us soon.

Note: the SBA also released a cross-program eligibility chart.

COVID-19 Financial Relief, Education, Tips

Restaurant Revitalization Fund: 4/13 SBA + IRC Webinar

April 13, 2021 Nancy McClelland Leave a comment

Today’s excellent Restaurant Relief Town Hall was recorded and released later in the day for all to enjoy.

Erika Polmar, of the Independent Restaurant Coalition, was joined this time by two representatives of the SBA: Patrick Kelley and Julie Verratti. These two were not just talking heads who simply touted how great the program is — instead they gave real guidance, solid explanations, and answered many questions from the IRC and attendees.

I was encouraged in part because Patrick and Julie are actually crafting the program, refining it, and working with groups such as IRC to make it happen. They showed an eagerness to make this program a success, and the skills to back it up. Julie Verratti in particular was a welcome change to what we’ve seen at the SBA over the past year — she was articulate, knowledgeable, humble, and seemed to have a real comprehension of the issues at hand and what is at stake; she gets why it’s so important to get this program right. She also has a good handle on what elements of the program come from statute and where the SBA has authority to interpret and administrate. Patrick indicated appropriate deference to her knowledge, and to the process of getting the program designed and tested properly — before opening the floodgates to applications. Let’s hope these two keep up the good work and have what they need to roll this out effectively.

As usual, I took notes — they did a full overview plus deep dives into certain areas and it’s worth your hour of time to watch. These notes are just the noteworthy new items from my own perspective.

The biggest news is that the SBA Administrator has chosen to preemptively extend the final date for expending the funds all the way to 3/11/2023 — the maximum allowed by statute.

Debt service will be considered a covered expense — both principal and interest payments count! (Clarification: no debt prepayments allowed, but regular debt service of all types is permitted.)

Also on the list of covered expenses is depreciation — but not “bonus or accelerated”.

Related follow-up question: does that mean we have to recalculate depreciation from the usual MACRS to straight-line? That doesn’t seem like what he meant, but we’ll need clarification. I suspect he was only referring to bonus depreciation and Section 179 expensing.

Women-owned, veteran-owned, socially/economically disadvantaged individuals – if anyone owns 20% or more and qualifies in one of these groups, add them together, to see if they reach 51%. If so, they can use the 21-day priority period.

Related follow-up question: to clarify — a 50/50 husband-wife owned company would NOT qualify as women-owned?

They said numerous times that everybody should apply on Day One.

Related follow-up question: How will the SBA avoid the system going down if everyone is applying on Day One, like what happened with the SVOG?

Related follow-up question: is this the case even if they’re not qualified to apply during the 21-day priority period? So a white-cis-male-owned restaurant under $500k revenue should still apply on Day One?

Timing of opening the program: SBA will have a 7-day pilot period to test their system (with people randomly selected from self-identifying as veteran, women-owned from PPP applications), and only then will go live with the 21-day advance application period for those who qualify.

Related follow-up question: How much notice will we have that the RRF is opening? Do we know when it is going live? As a CPA firm we are scrambling to calculate PPP1 Forgiveness and 2020 ERC so we can get the amount of ERC-eligible wages pulled off the 2020 returns before filing them. But we don’t have IRS guidance about whether 50%+ owners are allowed to take ERC… so all those returns are on extension right now. We want to make sure we wait as long as possible to get them all filed (in case IRS comes out with guidance), but that they are all submitted before this program goes live.

They will be working on allowing many different forms of documentation to prove the revenue decline, but tax returns, as they said last time, will be the easiest, most streamlined and efficient approach. Form 4506-T will be submitted through the docusign e-signature portion of the application, which allows SBA to confirm tax information with the IRS.

That’s it for now — I encourage you to watch the webinar and to start planning for an opening that’s more likely going to be a week or two away, rather than between now and the 19th (as was suggested last week). For planning purposes we at least know we’ll have a full week from when they start testing the application portal (though I’m not sure how we’ll know when that will begin).

Julie Verratti used the phrase “working in the world of reality and not in a vacuum” to describe their relationship with IRC and why they are doing this kind of outreach — some of the most encouraging words the SBA could possibly offer to us after the past year of jumping through hoops for financial relief.

COVID-19 Financial Relief, Education, Tips

Restaurant Revitalization Fund: Free Webinar from Rep. Lee & New NRA FAQ

April 11, 2021 Nancy McClelland Leave a comment

Still no word on the SBA guidance we had hoped for this past Friday, but the end of the week did bring us some new info about the Restaurant Revitalization Fund.

On April 8th, Congresswoman Barbara Lee hosted a free informational webinar that was chock-full of excellent info. If you don’t have time to watch the full 41-minutes, then take a look at her twitter thread to see excerpts of the most frequently-asked questions.

Then on the following day, the National Restaurant Association released an informative updated FAQ about the RRF program. There are 39 questions in the FAQ and every one is worth reading. Please — whether you are a restaurant owner or you work with them… do your homework! I know we’re all exhausted, but this is too important not to: check it out. If you absolutely must read a summary for now, this “Nation’s Restaurant News” article does a nice job.

There were only two new pieces of info on the FAQ since the notes I took at the IRC webinar, as far as I could tell:
1) PPP loans are deducted from total eligible funds, but EIDLs and ERTCs will likely not be. This makes sense, since an Employee Retention Credit does not show up as income on a tax return, but it’s nice to know NRA doesn’t expect it to count as income, either.
2) The minimum grant award may be set at $1,000. This is apparently to address the effort that goes into applying — so many got paltry PPP loans unexpectedly and were frustrated at so little reward after so much effort.

It also reiterates the following details:
– The covered period may extend through March 2023
– Permanently closed and bankrupt businesses without reorganization plans are ineligible
– Businesses owned by women, veterans and socially/economically disadvantaged individuals will require self-certification
– Eligible expenses include maintenance and construction
– RRF grants will not be taxed as income, but are eligible for federal tax deductions

Cross your fingers for upcoming guidance from the SBA, a draft application, and a date for the program opening. We are hoping for at least a week’s notice between the draft being released and the program going live, so that small business owners and their accountants have sufficient time to prepare.

Accounting Services for Small Businesses