My excellent colleagues over at Wegner CPAs are providing yet another free webinar on the remaining Covid-19 relief programs for small business owners.
Do you still have questions about the COVID relief programs? Join us for an overview of what’s available and learn about any updates to the:
Kate Serpe, CPA, Senior Manager, joined Wegner CPAs as an intern in 2010 and was hired full-time as part of the Accounting Solutions Group in 2011. Kate has experience providing controllership and CFO services to cooperatives and not for profit organizations and specializes in board presentations and assisting clients with strategic planning.
Dan Bergs, CPA, Senior Manager, joined Wegner CPAs as an intern in 2008 and started full-time after graduation in 2010. He specializes in working individual and business clients providing them with a variety of tax and accounting services.
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.
Note: this is an update to an existing blog post — the instructions below are specific to the Biz2Credit PPP lending platform. If you received your loan through another platform, please see my original post.
For over a year we waited for legislation from Congress as well as guidance from both the SBA and IRS as to the interplay between the Employee Retention Credit (ERC) and the Paycheck Protection Program (PPP). It appears the last of that guidance was issued on August 10, 2021 — so, at this point, as long as you have worked out the interplay between PPP and the Employee Retention Credit (ERC), then you should go ahead and apply. Which means that if you are a sole proprietor 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.
For PPP draws in 2021, our firm participated in a joint program by AICPA and Biz2Credit called the “CPA Loan Portal”. We’ve prepared the following step-by-step instructions for clients of ours who were funded through this system — however, I believe the instructions are the same for small business owners who applied directly with Biz2Credit. (Let us know in the comments if this is the case or if you had to tweak the approach at all.)
First, a couple general comments 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 prior-year net profit (or gross profit, for those who applied for PPP funding under the last-minute changes to the rules) automatically forgiven. Your forgiveness amount should exactly equal your loan amount, presuming the original loan was calculated properly.
According to Biz2Credit on their July 1 webinar (from their PPP Forgiveness Required Documents Customer Guidebook), no documentation is required for sole proprietors with loans of $150k or less:
How-To Instructions for PPP Forgiveness – AICPA Biz2Credit Application – Self-Employed with No Employees
First things first, decide whether you’d like to fill out the forgiveness application yourself or whether you’d like your CPA firm to do it for you for a small fee. Once you’ve informed them that you’d like to DIY, they will need to “assign” the forgiveness application to you, which will trigger an email that looks something like this:
Once you log in to your account using the credentials you created when you signed the PPP draw application just before getting funded, you’ll be walked through a series of screens.
Click the “Apply for Loan Forgiveness” button.
Most of the information will be automatically filled in based on the initial loan application information. There is no need to enter information in any of the fields marked “(Optional)”. Click the “Confirm” button.
A pop-up should suggest you use the 3508-S application, the simplest one – click the Continue button to go to the Basic PPP Loan Information screen.
Covered Period Start Date should default to the disbursement date as the start date. The duration of the covered period can be anywhere from 8-to-24 weeks; if the applicant is self-employed with no employees, we suggest a 10-week period. The end-date will auto-fill.
Most of the information will fill in automatically, but you will have to note the number of employees at the time of the forgiveness application – for self-employed with no employees, the answer is 1.
For a self-employed person with no employees, the Amount of Loan Spent on Payroll Costs should be the full amount of the PPP loan.
Click the green “Next” button on the lower-right corner to continue.
A pop-up will come up – read and click “Accept & Continue” if you agree.
You should get a screen confirming the form was completed and letting you know they have sent an email with a link to Docusign the application. Do not click the “Continue” button until you sign the application. Open your email program in a separate tab to find the email from Biz2Credit Contract Support via Docusign, with the subject, “Biz2Credit : PPP Loan Forgiveness Application Form 3508S”. Keep in mind that it may be in the “Promotions” or “Updates” tab, or in Spam.
Click the orange “Review Document” button in the email.
The Docusign document should open in a separate tab – you may need to allow it to access your location.
Checkmark the agreement and click “Continue”.
Click the “Start” button and follow the guidelines to initial twice and then sign the form. Click the “Finish” button when you are done. Save a copy for your own records.
Go back to the Biz2Credit tab and click “Continue” (if you accidentally closed the tab, please go to the Biz2Credit site and log in again). It is essential that you click the “Continue” button to submit the application.
Click “Ok” on the pop-up. This will take you back to the dashboard – at the bottom, instead of the “Apply for Loan Forgiveness” button, you should see two links: View Submission and View Documents. There is no need to click on these at this point, but seeing them is reassurance that your application has in fact been submitted.
(If you did not download the form after Docusigning, then you can do it at this point, by clicking “View Documents”. It will then take you to a screen with a long list of possible documents – the top link (“E-signed 3508”) allows you to download a pdf of the e-signed document for your records.)
You will receive two more emails from Biz2Credit: 1) an email via Docusign allowing you to view or download the completed document (which at this point you’ve already done); and, 2) a confirmation that your loan forgiveness application is being sent to the SBA.
Now sit tight and await a confirmation email from Biz2Credit once the SBA has forgiven the loan – please make sure to forward this to your CPA firm… and congratulations!
Note: Even though no documentation for loans under $150k is required, occasionally there will be a follow-up email from Biz2Credit requesting certain items. Please forward to your CPA firm if this occurs and they will advise (and they’ll inform your Biz2Credit lending rep that this step should not be required).
For self-employed folks with no employees, the PPP Forgiveness process is very straightforward. Please let us know in the comments if you come across challenges, so others can learn from your experiences — especially for those who applied directly with Biz2Credit instead of through your CPA. 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.
The National Federation of Independent Business is hosting a free webinar with special guest, Matt Evans, CPA, SMA, CFM. Join them as he reviews the benefits of the ERC program, a refundable tax credit that could be worth up to $33,000 per employee for qualified wages an eligible employer pays to employees after March 12, 2020, and before December 31, 2021.
In this FREE webinar, Matt will explain how to:
• Determine ERC eligibility; • Calculate the amount of ERC; • Access and apply for the ERC; and • Utilize both the PPP and ERC programs.
NFIB hosts Beth Milito and Holly Wade will conclude the webinar with LIVE Q&A to answer your PPP, ERC, FFCRA, and EIDL questions. You can submit your questions ahead of the webinar using the registration form so they can make sure to answer them.
Can’t make this webinar? Don’t worry! Register now and they’ll email you an on-demand version.
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.
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. See my recent blog post for easy instructions.
It also means that if you have employees (or are an employee yourself), but you know that your company does not qualify for ERC, you are ready to apply. See below for less-than-easy but still DIY-worthy instructions.
For borrowers of more than $150k who had no wage or FTE reductions, or who qualify for a safe harbor/exemption:
As your loan was higher than $150k, you do not qualify to file the simplest PPP Forgiveness form (3508S). However, presuming you followed all the rules and had no reductions, you do qualify for the “EZ” form (3508EZ). Please make sure your lender allows you to use this approach. For reference, here is the forgiveness application form (pages 1-4) and instructions – but for the actual forgiveness process, instead of filling the form out, you will apply through your lender’s loan portal and it will walk you through the steps. Please carefully read through the checklist and instructions on pages 5-9.
Please also read through this Form 3508EZ Step-by-Step guide before beginning the process at your lender’s portal, as the questions you will be asked mirror the actual application.
Some important tips when going through the process:
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).
Number of employees at time of loan application and forgiveness application are both simple head-counts, not FTEs or full- vs. part-time or anything else.
Covered Period is the date you received the funds through 24 weeks later, unless you determined a shorter period would be advantageous.
We recommend the “Amount of Loan Spent on Payroll Costs” total is not any higher than the minimum needed for forgiveness.
“Requested Loan Forgiveness Amount” should be the exact full total of your PPP Loan.
If you were unable to operate at full capacity, you may check the second box on the checklist, which means there is no requirement to fulfill the FTE (full-time equivalent) test.
Regarding backup documentation that you must submit with your application, keep in mind that what is considered acceptable support is up to each individual lender. – Payroll: your lender may ask you for bank account statements, payroll tax form 941s, and canceled checks for benefit invoices as proof of payment. – Nonpayroll: For rent/mortgage/utilities payments, your lender may ask for documentation that the obligation/services existed prior to 2/15/2020. They are likely to ask for proof of payment for all amounts claimed in this section.
If there is any concern that you might not have fulfilled the wage reduction or FTE tests, or that you do not meet a safe harbor or exemption for them, we strongly suggest working with a trusted advisor to prepare your PPP Forgiveness application, as it gets extremely complicated. Our approach, to be safe, has been to download the free Form 3508 PPP Forgiveness Calculator from the AICPA, regardless of which form you qualify to submit, so as to run all the numbers for the wage reduction test, and fill out the information to see if you are exempt from the FTE test or not. If you are not exempt, the AICPA also offers a free FTE calculator. We then suggest you retain these files as backup in case of audit, even if you end up passing all the tests and qualifying to submit a simpler form than the full 3508.
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.
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.
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.
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.
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:
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.”)
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.
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.
The Restaurant Revitalization Fund (RRF) is a grant calculated by subtracting 2020 revenue from 2019 revenue to calculate the total drop between the two years — presumably caused by the Covid-19 pandemic. To substantiate the amount of the revenue decrease between 2019 and 2020, the SBA will be requesting tax returns for both years. There are other documents that will be acceptable, but the way to get the application through the system as quickly as possible – processed by computers rather than slowed down by human review – is to use tax returns.
(In the past two days, 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.”)
So the options are:
#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.
To clarify, neither approach will hold up the RRF or cause a smaller amount to be awarded, because ERC is not considered income (that’s why the wages they pay for cannot be deducted). The goal with both approaches is to get tax returns ready for the RRF application 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 the AICPA Town Hall yesterday — 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.
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.
4/7/2021 UPDATE: I attended yesterday’s Independent Restaurant Coalition zoom call, and wrote up notes here. Please give it a read after you’ve taken a look at the blog post below, as it answers some FAQs.
4/1/2021 UPDATE: the SBA just announced that RRF applicants will not need a DUNS number or SAM account. This is a change from March, when it was expected that applications would require this process as they currently do under the Shuttered Venues Operators (SVO) grant program. The shift by SBA recognized the significant demand for the program – up to hundreds of thousands of applicants are expected.
From the start of the Paycheck Protection Program (PPP), my small business clients — specifically the restaurants, bars, cafes and caterers — were confused and frustrated. We put so much time and effort into applying for PPP funds, working through the tortuous planning for spending in a way that would lead to 100% forgiveness, and had practically nothing left to show for it. Shuttered or take-out only, there was simply not enough revenue coming in to support the extremely high labor, inventory, and overhead costs typical of the industry. Had it not been for state and local grants, most of them would have had to close their doors permanently.
They weren’t alone — in fact, restaurant lobbyists have been working for many months on crafting financial relief legislation that suits the specific needs of the hospitality industry. And I’m amazed to say — they did a great job, and most of it made it into the final law. Unlike the constantly-changing mess that the PPP has been, this new program is thought-through, carefully-written, and has clearly learned from PPP’s mistakes. (It’s also taken the better part of a year to bring it into existence, so there are two sides to this coin, as is usually the case.) And it will be opening soon.
The Restaurant Revitalization Fund (RRF), as it is now known, was signed into law as part of the recent American Rescue Plan Act. Unlike the PPP, which was based on payroll costs, the RRF is structured to disburse tax-free federal grants in the amount of a restaurant’s “pandemic-related revenue loss“.
Grants are calculated by subtracting 2020 receipts from those of 2019. PPP funds received will offset (reduce) the grant amount, but those funds will not be considered part of gross receipts. The total grant amount for an eligible business and any affiliated businesses is capped at $10 million and is limited to $5 million per physical location of the business.
In addition to basing the award amount on revenue loss rather than any other measure, other features of the RRF program that seem a better fit for restaurants are the flexibility on how the funds can be spent and over how long (Feb 15, 2020-Dec 31, 2021). Categories of eligible costs include:
payroll;
principal or interest on mortgage obligations;
rent;
utilities;
maintenance (including construction to accommodate outdoor seating);
supplies such as protective equipment and cleaning materials;
normal food and beverage inventory;
operational expenses;
and many other expenses that the SBA determines to be essential to maintaining operations.
Another area where there is a great deal of flexibility — eligible entities can be “a restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.”
There will be an initial 21-day period when the SBA will prioritize awarding grants for businesses owned by women, veterans, or socially and economically disadvantaged individuals.
To learn more, I strongly encourage you to read the Independent Restaurant Coalition’s FAQ, and attend one of their upcoming zoom “round table” webinars. The next ones will be held on Tuesday, April 6th at 12pm ET / 9am PT, and Wednesday, April 7th at 11am ET / 8am PT.
4/1/2021 UPDATE: In today’s AICPA Town Hall, they shared that the SBA has announced that RRF applicants should prepare with the following next steps —
The “checklist similar to SVOG” refers to another program, the Shuttered Venue Operators Grant — their checklist can be found on a download via the SBA website. We expect a similar one to be released specifically for RRF soon, but this is probably a good guideline.
I’m looking forward to seeing at least one Covid-19 financial relief program play out right and run smoothly — which I recognize may be too much to ask, but for the sake of all our beloved community watering holes, gathering spots, and the places that nourish our bodies and souls, I will keep my fingers crossed. They’ve been through so much already and I would love to see this program help them make it to the finish line.
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.
My trusted colleagues over at Wegner CPAs are putting on a two-week series of FREE webinars geared toward small business owners. They will go through each of the following current Federal relief programs designed to help small businesses make it through to a brighter day:
Employee Retention Credit 2021
Employee Retention Credit 2020
Shuttered Venue Operator Grants
Paycheck Protection Program
Restaurant Revitalization Fund
Economic Injury Disaster Loans
All of these programs have been changed over the past month to make them more useful to small business owners — often with the effect that multiple programs are available simultaneously. The resulting complexity is a real challenge, but the amount of financial relief available makes it worth learning what you can (and potentially working with a professional to make it happen).
We have been reaching out directly to clients who we believe qualify for each of these programs — but if you work with us and think you are eligible, yet haven’t been contacted, please let me know.
Employee Retention Credit 2021 Tuesday, March 30, 2021 10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET) ERC in 2021 can result in big dollars for your organization. We will discuss how to determine if you’re eligible and how to be sure you file for the credit timely. Register
Employee Retention Credit 2020 Wednesday, March 31, 2021 10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET) Were you eligible for ERC in 2020? Find out as we take a deeper dive into the credit eligibility requirements and rules for last year. We’ll also review what you need to do to claim the credit for 2020. Register
Shuttered Venue Operator Grants Thursday, April 1, 2021 10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET) The SVOG portal opens on April 8th. Are you eligible and ready to apply? Join us to learn more about the program and what you need to be doing now to prepare. Register
Paycheck Protection Program Tuesday, April 6, 2021 10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET) Updates continue to roll out for PPP. We’ll discuss what the soon to be signed extension means for applicants and tips on getting through the application process. We’ll also review the updated loan calculation for Schedule C filers. Don’t forget about PPP loan forgiveness! Register
Restaurant Revitalization Fund Wednesday, April 7, 2021 10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET) The SBA announced that they hope to have RRF up and running by early April. We will review timely released guidance and how to prepare for applying to the program. Register
Economic Injury Disaster Loans Thursday, April 8, 2021 10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET) The EIDL program has continued to evolve over this last year. There are EIDL loans and EIDL grant advances. Are you eligible for either? Learn more about this program and the changes that have come from the last two stimulus bills. Register
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.
Ah, the PPP. We thought our daily struggle with you last summer was as challenging as it would get. How naïve we were!
Lots of changes to the program have occurred as of late — all to the theoretical benefit of borrowers, though in practice not as welcome as one might expect.
Per the AICPA, “if a Schedule C filer has employees, the borrower may elect to calculate the owner compensation share of its payroll costs based on either net profit or gross income minus expenses reported on lines 14 (employee benefit programs), 19 (pension and profit-sharing plans), and 26 (wages (less employment credits)) of Schedule C. If a Schedule C filer has no employees, the borrower may simply choose to calculate its loan amount based on either net profit or gross income.”
This is indeed excellent news, but a) why this didn’t get applied to partnerships as well — which are entities following the same concept as Schedule C filers, only with more than one owner — is totally illogical; and, b) this is a slap in the face to the many millions of PPP borrowers who got practically nothing under the old rules and are now bound to them, as this new rule is not retroactive. AICPA has issued a statement about the inherent unfairness, calling on Congress to correct it.
2) The safe harbor for the “good faith loan necessity certification” for First Draw loans using the new Schedule C calculation is reduced from $2M to $150,000. If your loan is in this range, carefully consider which calculation you wish to use and weigh the difference against the risks.
3) Businesses that receive a first- or second-draw PPP loan after Dec. 27, 2020, may now also receive a Shuttered Venue Operators Grant (SVOG), with the proceeds from the PPP loan subtracted from the amount of the SVOG. Venue operators do not have to subtract any PPP funding received before Dec. 27, 2020. (More here.)
4) Many more non-profits are eligible for PPP loans than in previous iterations of the program, as well as internet-only news and periodical publishers. (More here.)
5) Costs eligible for loan forgiveness in the revised PPP include payroll, rent, covered mortgage interest, and utilities, as well as these types:
Covered worker protection and facility modification expenditures, including PPE, to comply with COVID-19 federal health & safety guidelines.
Covered property damage costs related to property damage and vandalism or looting due to public disturbances in 2020 that were not covered by insurance.
Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
Covered operating expenditures, which refer to payments for any business software or cloud computing service that facilitates business operations; product or service delivery; the processing, payment, or tracking of payroll expenses; human resources; sales and billing functions; or accounting or tracking of supplies, inventory, records, and expenses.
6) To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period between eight and 24 weeks’ long (no longer either/or, but any period in-between).
7) Improvements in the PPP have unfortunately led to slowdowns. Though the program is now more focused on and directed toward helping the struggling businesses who need it most — smaller ones, minority- and women-owned, hospitality industry, etc. — it’s been handled in a haphazard way that has confused applicants and lenders alike. And safeguards put in place by the SBA to combat fraud had the unwelcome consequence of holding up millions of valid applications.
9) The program our firm uses — AICPA’s CPA Loan Portal — as well as many others, is already closed to new applicants as well as the public, and one must go through a validated partner firm such as ours in order to apply. However, I have heard that Cross River Bank (my favorite lender from the first round) is still accepting applications. Their FAQ, as well as their list of required documents by entity type, are both quality-information and well-organized. Please read those sections before applying. I have recently been informed that Lendio is also still accepting applications. (These are not affiliate links; I do not earn anything for referrals.)
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