, , , ,

How Does PPP Loan Forgiveness Work for Self-Employed?

How Does PPP Loan Forgiveness Work for Self-Employed?

Loan forgiveness for PPP loans for companies is generally, easily understood in concept. But how does loan forgiveness work for the self-employed?

We suggest you talk directly with the bank that approved your PPP loan for how to apply for and document for your loan forgiveness. But briefly, the internet and its accounting experts have offered answers:

https://www.google.com/search?source=hp&ei=sFywXqn-AYWWtQXbvLWwCQ&q=how+is+a+self+employed+ppp+loan+forgiveness+rules&oq=how+is+a+self-employed+ppp+loan+forgiven

Forgiveness for self-employed individuals
You are entitled to use the PPP loan to replace lost compensation due to the impacts of COVID-19. However, you are not entitled to use the full amount to replace pay. Eight weeks worth of your 2019 net profit will be eligible for forgiveness.

https://bench.co/blog/operations/ppp-loan-forgiveness/

and

Payroll and Forgiveness For the Self Employed
The SBA provided additional guidance on April 14, 2020 regarding PPP for self-employed individuals. What follows is a brief summary. If you are self-employed and File IRS Form 1040 Schedule C, we recommend you read the full guidance

First, self-employed individuals without any employees who file IRS Form 1040 Schedule C calculate payroll differently. Use the net profit for the business from 2019 as reported on line 31 of Schedule C. Using up to $100,000 of net profit, divide that amount by 12 to get the average monthly net profit, then multiply by 2.5 to get the maximum loan amount. (Note you do not have to file your 2019 tax return before you apply, but the SBA says you must complete it.) 

For forgiveness, that same document provides the following guidance: 
“The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount spent over the covered period on: 
• Payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee (for eight weeks, a maximum of $15,385 per individual), as well as covered benefits for employees (but not owners), including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums); 
• Owner compensation replacement, calculated based on 2019 net profit … with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit, but excluding any qualified sick leave equivalent amount for which a credit is claimed under section 7002 of the Families First Coronavirus Response Act (FFCRA) or qualified family leave equivalent amount for which a credit is claimed under section 7004 of FFCRA; 
• Payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business mortgage payments); 
• Rent payments on lease agreements in force before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business rent payments); and 
• Utility payments under service agreements dated before February 15, 2020 to the extent they are deductible on Form 1040 Schedule C (business utility payments). 


That’s a lot of text, but details matter here. Note in particular that the SBA says the owner’s compensation portion of the loan here is limited when it comes to forgiveness: 

“It is appropriate to limit the forgiveness of owner compensation replacement for individuals with self-employment income who file a Schedule C to eight weeks’ worth (8 divided by 52) of 2019 net profit…This is because many self-employed individuals have few of the overhead expenses that qualify for forgiveness under the Act. For example, many such individuals operate out of either their homes, vehicles, or sheds and thus do not incur qualifying mortgage interest, rent, or utility payments. As a result, most of their receipts will constitute net income.”  

If that leaves you confused as to whether a self-employed individual can or cannot include qualified mortgage interest, rent or utility expenses in their forgiveness calculation you’re not alone. Tony Nitti, CPA, has written in a detailed Forbes article that “I would argue that the additional costs – mortgage interest, rent, utilities – are still eligible for forgiveness” but goes on to state it’s not completely clear. 

As always, seek guidance for a Certified Public Accountant.

, , , ,

City of Dallas Small Business Continuity Fund

(April 30, 2020) The City of Dallas officially announced today the Small Business Continuity Fund.

https://www.dallasecodev.org/565/Small-Business-Continuity-Fund

Beginning on May 4th, 2020, the Office of Economic Development will begin accepting applications for the Small Business Continuity Fund (SBCF) program. That application will be accessible at www.dallascityhall.com. The SBCF program is funded through the U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) funding, and is available to low-to-moderate income (LMI) microenterprise business owners (less than 5 employees) or small businesses with 50 or fewer employees that retain LMI workers. Businesses must be located in the City of Dallas. Businesses can apply for either a $10,000 maximum grant or a $50,000 maximum loan, but may not apply for both. Businesses must demonstrate at least a 25% reduction in sales/revenue as a result of the COVID-19 virus. Due to CDBG program requirements, non-profits are not eligible for this funding.Applications will be accepted from May 4th to May 11th, 2020. After May 11th, a lottery will conducted to select businesses for funding. Businesses must submit a complete application to be eligible for selection in the lottery, and must be able to provide complete documentation to a third party provider prior to any execution of a grant or loan. If you think your business might be eligible, please check https://www.surveymonkey.com/r/FTK5GCS. For more information, please review the FAQs document or email SBCF@dallascityhall.com.

, , , ,

Resource List from America’s SBDC

America’s SBDC (www.AmericasSBDC.org) represents America’s nationwide network of Small Business Development Centers (SBDCs). America’s SBDC is the parent brand and the national association recognized by the federal government, by statute, as the representative of America’s Small Business development center (SBDC) network. America’s SBDC has recently shared a very helpful resource list, that we in turn, want to share with you.

Resource Highlights
Free Virtual SBDC Coaching Sessions with Google Available in Select Locations: Arizona, California, Colorado, Georgia, Iowa, Massachusetts, New York, North Carolina, Nevada, Ohio, Pennsylvania, South Carolina, Tennessee, Texas   Our Partner Grow with Google is offering free 30 minute virtual 1:1 coaching sessions with a Googler to discuss either Google Ads, Google Analytics, Google My Business, or Google Productivity Tools (e.g. GSuite, Calendar, Gmail, and Hangouts Meet). For now, they ask that you please sign up for only two coaching sessions to ensure they can support as many organizations as possible. Also it’s best to sign-up for a coaching session that is at least 24 hours away so the coaches have enough time to prepare for your session. Click here ( https://files.constantcontact.com/25a896f6001/e60f1ae3-6e1f-45ec-a3ae-e6b621fc94e0.pdf ) to learn more.

Webinar: How To Become A Seller On The Amazon Business Market Place Thursday, April 30th at 1 pm ET/10 am PT The MBDA Business Center invites you to an overview of the Minority Business and Technology Initiative (MBT Initiative). This is a collaboration between Amazon Business and the U.S. Department of Commerce, Minority Business Development Agency (MBDA) that seeks to accelerate the inclusion of minority owned enterprises in e-commerce and to improve the use of digital technology for domestic and global sales. Special guest: Senator Marco Rubio To register for this webinar or learn about more learning opportunities & resources from Amazon, click here. ( https://www.amazon.com/b/?node=18014077011 )

Betterfin Launches ReadyRelief to Assist in Securing Stimulus Funds Checkout this easy-to-use, consumer facing platform for small business owners and a white-label version for SBDC advisors to use with small business clients. Click here ( https://www.betterfin.com/blog/readyrelief ) to learn more.

eBay Launches “Up and Running” The new program was created to help new small businesses transitioning to e-commerce through the COVID-19 crisis. The program is a pledge of up to $100 million in support for small businesses across North America. The program includes: Free basic eBay store subscription and waive selling fees for 3 months500 free listingsGuidance and resources needed to run business on eBay Click here ( https://pages.ebay.com/upandrunning/ ) to learn more.

Additional Resources

SBDC Webinars
https://calendar.google.com/calendar/embed?color=%239fe1e7&src=asbdcleadershipinstitute@gmail.com
SBDC Materials
https://drive.google.com/drive/folders/1PP64JtOjs08hKKNAAcr4rGFLMb1PsQeS
Resiliency Guide
https://americassbdc.org/protect-your-business/
Thryv Study
https://corporate.thryv.com/news/small-businesses-need-re-opening-survive-national-study-thryv-inc-americas-sbdc-shows/
Partner Resources
https://americassbdc.org/covid19-partner-resources/
Partner Offers
https://americassbdc.org/resources/sponsor-offers/
, , , ,

Update 4-25 on EIDL & PPP

In a press release, this Friday afternoon, the SBA announced: “The Small Business Administration will resume accepting PPP loan applications on Monday, April 27 at 10:30 AM EDT from approved lenders on behalf of any eligible borrower. This will ensure that SBA has properly coded the system to account for changes made by the legislation.”
(The press release did not include any specific information or details about the re-opening and resumption of EIDL.)
The new bill adds $50 billion into the Emergency Economic Injury Disaster (EIDL) loan program. There is another $10 billion solely for the EIDL Loan Advance.


The SBA.gov website further clarified:
Additional Funding Notice: The SBA will resume accepting Paycheck Protection Program applications from participating lenders on Monday, April 27, 2020 at 10:30am EDT. With the additional funding provided by the new COVID-19 relief package, SBA will resume processing EIDL Loan and Advance applications that are already in the queue on a first come, first-served basis. We will provide further information on the availability of the EIDL portal to receive new applications (including those from agricultural enterprises) as soon as possible.
https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

We believe this EIDL portal delay is due to having to modify the application form and software. The new bill added new provisions and criteria.

, , , ,

PPP for Self-Employed

On Thursday, April 23, the House passed the new appropriation bill previously passed this week by the Senate (update: and signed by the President on Friday). It is expected PPP and EIDL will reopen on Monday, April 27 (but keep checking sba.gov, in case the SBA EIDL application portal opens earlier!).

Update:

In a press release on Friday (4-24) afternoon, the SBA announced: “The Small Business Administration will resume accepting PPP loan applications on Monday, April 27 at 10:30 AM EDT from approved lenders on behalf of any eligible borrower. This will ensure that SBA has properly coded the system to account for changes made by the legislation.”
(The press release did not include any specific information or details about the re-opening and resumption of EIDL.)
The new bill adds $50 billion into the Emergency Economic Injury Disaster (EIDL) loan program. There is another $10 billion solely for the EIDL advances.
“The new legislation provides $310 billion in new funding for the Paycheck Protection Program with $30 billion going to small lenders with less than $10 billion in assets and another $30 billion earmarked for small lenders with between $10 billion and $50 billion in assets. This $60 billion set-aside may help mom-and-pop businesses frozen out of round 1 finally obtain loans. The balance, $250 billion of new funding, will go into the regular PPP loan program which, like the set-aside funds, provides forgivable loans of up to $10 million each.” (https://www.investopedia.com/how-to-navigate-the-new-stimulus-plan-and-get-a-ppp-loan-4843031)


The SBA.gov website further clarifies:
Additional Funding Notice: The SBA will resume accepting Paycheck Protection Program applications from participating lenders on Monday, April 27, 2020 at 10:30am EDT. With the additional funding provided by the new COVID-19 relief package, SBA will resume processing EIDL Loan and Advance applications that are already in the queue on a first come, first-served basis. We will provide further information on the availability of the EIDL portal to receive new applications (including those from agricultural enterprises) as soon as possible.
https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

Dallas Metropolitan SBDC has created a presentation on PPP for Self-Employed for this new category of businesses, that was launched just before monies were depleted. Click to download the PDF.

, , , ,

City of Dallas COVID19 Small Business Assistance Announced

The City of Dallas announced new financial relief programs for small businesses, along with other programs for residents.

Read More below:

https://www.fox4news.com/news/dallas-council-approves-rental-relief-fund-eviction-pause-small-businesses-assistance

The city also passed a resolution that will provide $5 million in assistance to small businesses hit hard by COVID-19 crisis. The money from the federal CARES Act will be distributed in the form of either $10,000 grants or $50,000 loans.

“Small businesses are the lifeblood of the Dallas economy,” said Dallas Mayor Eric Johnson.

Applications for Dallas businesses also go live on May 4. Owners could get the dollars as early as June 15.

Businesses will be required to retain 80 percent of the workforce they had February 29. The city has not yet released information about where people and businesses can apply for these funds.

More than a million dollars of that funding is specifically directed to historically under-invested communities. It’s intended to be a very thorough process.

Small business relief

The Office of Economic Development is launching a $5 million Small Business Continuity Fund that will provide up to $10,000 in grants and up to $50,000 in low-cost loans to small businesses affected by COVID-19.

The businesses must be able to prove they were in operation for a minimum of six months prior to March 16 must be low to moderate income microbusiness owners and/or businesses that employ or previously employed at least 51 percent LMI workers.

The fund is intended to ensure continued operations of small businesses and job retention by those businesses. The application is expected to go live in May for grants and loans to begin in June.

+++

Resources:

http://dallasecodev.org/562/COVID-19-Info-for-Small-Businesses

, , , ,

Update on new PPP and EIDL Appropriation Monies

Update Friday April 24. The House passed the appropriation bill on Thursday.

President Trump signed a $484 billion interim coronavirus relief bill on Friday that will add another $310 billion to the small-business Paycheck Protection Program (PPP), as well as provide billions in aid to hospitals and for testing.

https://www.axios.com/trump-signs-interim-coronavirus-relief-bill-192d7b83-ec92-4fa9-9f8c-be241e886192.html

….

On Tuesday (April 21) the US Senate passed a $484 Billion appropriation bill to further fund the SBA Economic Injury Disaster Loan (EIDL) (and EIDL Loan Advance) and Paycheck Protection Plan (PPP) programs.

The US House votes on Thursday (April 23) . If passed, it will go to the President to sign.

Until then, the EIDL application portal remains unavailable. But the SBA is continuing to process applications internally, and banks continue to accept applications for both employer and sole-proprietor/self-employed/1099 PPP programs.

We expect the EIDL portal to reopen soon.

An informative article:

https://www.washingtonpost.com/us-policy/2020/04/21/congress-coronavirus-small-business/

, , , ,

Senate approves $480 billion package

https://www.cnn.com/2020/04/21/politics/chuck-schumer-coronavirus-relief-small-business-cnntv/index.html

CNN reporting:
Updated 5:48 PM ET, Tue April 21, 2020

Senate approves $480 billion package to help small businesses and hospitals, expand testing

More details of what’s in the deal
Of the $310 billion authorized for the Paycheck Protection Program, $60 billion will be set aside for smaller lending facilities, including “community financial institutions, small insured depository institutions and credit unions with assets less than $10 billion.”
There will also be $10 billion for grants under the Emergency Economic Injury Disaster Loan program, $50 billion for disaster recovery loans

The deal will also provide $75 billion for hospitals and health care providers stretched thin by the pandemic to address coronavirus expenses and lost revenue and an additional $25 billion to facilitate and expand Covid-19 testing.

, , , ,

Latest News 4-21-20

https://www.cnn.com/2020/04/21/politics/chuck-schumer-coronavirus-relief-small-business-cnntv/index.html

CNN is reporting:

Congress reaches deal on $450 billion package to help small businesses, sources say

By Manu Raju and Clare Foran, CNN

Updated 1:26 PM ET, Tue April 21, 2020

(CNN) Congressional negotiations have reached a deal on a bill that includes hundreds of billions of dollars in new funding for small businesses hurt by the coronavirus outbreak, three sources familiar tell CNN. The text of the bill should be unveiled as soon as Tuesday afternoon as the two sides give the deal a final read. Lawmakers will try to pass it in the Senate at 4 p.m. ET when the chamber convenes for a pro forma session.President Donald Trump signaled his approval of the deal on Twitter, saying, “I urge the Senate and House to pass the Paycheck Protection Program and Health Care Enhancement Act with additional funding for PPP, Hospitals, and Testing.”

, , , ,

SBA EIDL and PPP resources

Update: as of 4-21-20, news media is reporting that a ~$450B supplemental appropriation bill will pass soon, and SBA EIDL and PPP loan applications and approvals can resume.

Our own resources tell us that if you have applied already, that it is a waiting game. We understand this is not especially comforting as bills continue to grow. Some SBDC clients have recently received letters that their applications are being processed and that additional documentation will be requested. This is encouraging. It means the back end processes are moving forward.

Here is a brief list of resources.

For help with SBA’s Disaster Loan Assistance website please contact the disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or by e-mail at disastercustomerservice@sba.gov.

DMSBDC website:

http://dallasmetropolitansbdc.com/category/covid19/

SBA.gov information:

https://www.sba.gov/funding-programs/disaster-assistance

EIDL application itself:

https://covid19relief.sba.gov/#/

an SBA bank list resource 1:

(refer to page 29 of the Resource Guide)

https://www.sba.gov/sites/default/files/files/resourceguide_3148.pdf

SBA bank resource 2:

an Excel List of SBA lenders

https://www.sba.gov/sites/default/files/resource_files/Loan_Volume_Comparison_As_Of_September_30_2019.pdf

A organization of SBA lenders:

A US Treasury Fact Sheet:

https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf

US Treasury PPP website:

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

US Treasury PPP FAQ

https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf

NDC – PPP application webinar

Protection Program Documents

Treasury Dept- PPP Fact sheet

https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf

SBA PPP Application

https://home.treasury.gov/system/files/136/Paycheck-Protection-Program- Application-3-30-2020-v3.pdf

US Chamber of Commerce PPP Guide

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

Senate FAQ Both loan programs

https://www.sbc.senate.gov/public/_cache/files/2/9/29fc1ae7-879a-4de0- 97d5-ab0a0cb558c8/1BC9E5AB74965E686FC6EBC019EC358F.the-small- business-owner-s-guide-to-the-cares-act-final-.pdf