Stimulus help for small businesses, sole proprietors, s-corp etc

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Theseus
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Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 10:09 am

I have been reading up on this through various sources as I am going to be helping many businesses through my volunteering at SCORE.

Both laws (March 6th and March 26th - CARES) have significant provisions to help small business community. I thought I'd start a thread where we can exchange ideas and experiences focused on that part of the community.

Benefits, assistance and loan forgiveness are available to small businesses, sole proprietors, s-corps, private non-profits etc. Per my reading so far

- EIDL allows for up to $2,000,000 at 3.75% loan. First $10,000 are extended immediately - and if I am reading this correctly is forgiven.

- PPP allows for up to $10,000,000 loan (maximum of 250% of average monthly payroll cost) at a rate up to 4% with significant forgiveness for employee retention, mortgage/rent/lease payments, utilities etc. Also EIDL loan can be refinanced into PPP.

My goal here is the exchange experiences and help others navigate the complex process to make it most useful in each situation. Basically crowd source the knowledge.

Megamill
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Megamill » Sat Mar 28, 2020 10:20 am

Can a self-employed, "one man shop" (so no other employees but himself, being a W2 employee) apply for the loan to pay himself his lost wages and rent, utilities and then have that all forgiven? If yes, does he simply go to his bank where his business account is to apply?

jpmorganfunds
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by jpmorganfunds » Sat Mar 28, 2020 10:22 am

Where do we apply for the PPP? There's no information on the SBA website or any bank website.

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 10:27 am

Megamill wrote:
Sat Mar 28, 2020 10:20 am
Can a self-employed, "one man shop" (so no other employees but himself, being a W2 employee) apply for the loan to pay himself his lost wages and rent, utilities and then have that all forgiven? If yes, does he simply go to his bank where his business account is to apply?
Basically the answer is YES. This is the whole purpose of these two bills. I think they seemed to have learned from 2008 crisis.

Any compensation over $100,000 can not be part of the Payroll cost.

And yes, you will need to go through the bank that takes SBA loan guarantee (these lenders are called 7(a) lenders).

Megamill
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Megamill » Sat Mar 28, 2020 10:35 am

Theseus wrote:
Sat Mar 28, 2020 10:27 am
Megamill wrote:
Sat Mar 28, 2020 10:20 am
Can a self-employed, "one man shop" (so no other employees but himself, being a W2 employee) apply for the loan to pay himself his lost wages and rent, utilities and then have that all forgiven? If yes, does he simply go to his bank where his business account is to apply?
Basically the answer is YES. This is the whole purpose of these two bills. I think they seemed to have learned from 2008 crisis.

Any compensation over $100,000 can not be part of the Payroll cost.

And yes, you will need to go through the bank that takes SBA loan guarantee (these lenders are called 7(a) lenders).
So, if a self-employed (S-corp) person applies for this PPP loan to cover lost wages, rent, utilities due to his business being shut down by order of state government, would that not be better for him vs. claiming unemployment because don't you have to pay taxes on unemployment benefits at tax filing time (the next year)?

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 10:41 am

jpmorganfunds wrote:
Sat Mar 28, 2020 10:22 am
Where do we apply for the PPP? There's no information on the SBA website or any bank website.
Here is the link for EIDL. I remember seeing an online portal to apply just yesterday. But they seem to have taken down that link. https://www.sba.gov/page/coronavirus-co ... -resources

Check if your bank is a 7(a) lender. It will be through a lending institution that is 7(a) lender (accepts SBA loan guarantee).

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 10:49 am

Megamill wrote:
Sat Mar 28, 2020 10:35 am
Theseus wrote:
Sat Mar 28, 2020 10:27 am
Megamill wrote:
Sat Mar 28, 2020 10:20 am
Can a self-employed, "one man shop" (so no other employees but himself, being a W2 employee) apply for the loan to pay himself his lost wages and rent, utilities and then have that all forgiven? If yes, does he simply go to his bank where his business account is to apply?
Basically the answer is YES. This is the whole purpose of these two bills. I think they seemed to have learned from 2008 crisis.

Any compensation over $100,000 can not be part of the Payroll cost.

And yes, you will need to go through the bank that takes SBA loan guarantee (these lenders are called 7(a) lenders).
So, if a self-employed (S-corp) person applies for this PPP loan to cover lost wages, rent, utilities due to his business being shut down by order of state government, would that not be better for him vs. claiming unemployment because don't you have to pay taxes on unemployment benefits at tax filing time (the next year)?
PPP forgiveness is only for up to 8 weeks as of now. And unemployment is for up to 39 weeks which is regular unemployment + $600 week. I have to read exact language to see where the constraints and limits are. But you will have to calculate and see what is the most beneficial in your situation.

fundus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by fundus » Sat Mar 28, 2020 11:02 am

It appears to me that you can take advantage of both extended unemployment and PPP (7a loans):

Furlough your employees
You and your employees can file for unemployment
You can apply for PPP
Rehire your employees as of the closing date of the loan

At least, that's my reading so far.

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 11:13 am

fundus wrote:
Sat Mar 28, 2020 11:02 am
It appears to me that you can take advantage of both extended unemployment and PPP (7a loans):

Furlough your employees
You and your employees can file for unemployment
You can apply for PPP
Rehire your employees as of the closing date of the loan

At least, that's my reading so far.
You can get PPP. But from what I am reading, you won't get loan forgiveness if you furlough employees (you can still get PPP loan). The forgiveness formula prorates forgiveness based on the average FTEs you had before compared to average FTEs during the 8 week period.

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 11:29 am

fundus wrote:
Sat Mar 28, 2020 11:02 am
It appears to me that you can take advantage of both extended unemployment and PPP (7a loans):

Furlough your employees
You and your employees can file for unemployment
You can apply for PPP
Rehire your employees as of the closing date of the loan

At least, that's my reading so far.
From the bill.

(A) IN GENERAL.—The amount of loan
forgiveness under this section shall be reduced, but not increased, by multiplying the amount described in subsection (b) by the quotient obtained by dividing—
(i) the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period; by
(ii)(I) at the election of the borrower
(aa) the average number of full- time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019; or
(bb) the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on January 1, 2020 and ending on February 29, 2020;

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MP123
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by MP123 » Sat Mar 28, 2020 11:58 am

So, it sounds like as an S-Corp owner I could apply for a loan to cover 2 months of payroll (at this point) and then have that loan forgiven as long as I don't lay myself off. And if forgiven I still won't owe taxes on it.

There must be a catch somewhere, or is this really free money?

Elysium
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Elysium » Sat Mar 28, 2020 12:05 pm

MP123 wrote:
Sat Mar 28, 2020 11:58 am
So, it sounds like as an S-Corp owner I could apply for a loan to cover 2 months of payroll (at this point) and then have that loan forgiven as long as I don't lay myself off. And if forgiven I still won't owe taxes on it.

There must be a catch somewhere, or is this really free money?
It's not free money. It is money the government is giving you if you are unable to keep your employees (including yourself) because your revenue is reduced or totally eliminated due to the restrictions in place, which is of no fault of yours, and the money is used for payments you need to cover. It's a trade off between the economy running off a cliff or softening the blow.

fundus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by fundus » Sat Mar 28, 2020 12:11 pm

Theseus wrote:
Sat Mar 28, 2020 11:29 am

From the bill.

(A) IN GENERAL.—The amount of loan
forgiveness under this section shall be reduced, but not increased, by multiplying the amount described in subsection (b) by the quotient obtained by dividing—
(i) the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period; by
(ii)(I) at the election of the borrower
(aa) the average number of full- time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019; or
(bb) the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on January 1, 2020 and ending on February 29, 2020;
Yes, but I think the "covered period" starts the day your loan closes. So as long as you rehire all your employees by the closing
date, your ratio would be 1:1.

"To encourage employers to rehire workers laid off due to the COVID-19 crisis, employers that rehire previously laid-off workers will not be penalized for having a reduced payroll at the beginning of the forgiveness period. If, during the period from February 15, 2020, through 30 days after enactment of the CARES Act, there is either a reduction in the number of or wages paid to FTE employees and the employer eliminates the reduction by June 30, 2020, the amount of loan forgiveness will be determined without regard to the reduction."

from: https://arentfox.com/perspectives/alert ... on-program
Last edited by fundus on Sat Mar 28, 2020 12:21 pm, edited 1 time in total.

jpmorganfunds
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by jpmorganfunds » Sat Mar 28, 2020 12:15 pm

Theseus wrote:
Sat Mar 28, 2020 10:41 am
Here is the link for EIDL. I remember seeing an online portal to apply just yesterday. But they seem to have taken down that link. https://www.sba.gov/page/coronavirus-co ... -resources

Check if your bank is a 7(a) lender. It will be through a lending institution that is 7(a) lender (accepts SBA loan guarantee).
The application form is for the old EIDL. There's no information about the new one or PPP. I checked various banks and there's no information either.

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MP123
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by MP123 » Sat Mar 28, 2020 12:39 pm

Elysium wrote:
Sat Mar 28, 2020 12:05 pm
MP123 wrote:
Sat Mar 28, 2020 11:58 am
So, it sounds like as an S-Corp owner I could apply for a loan to cover 2 months of payroll (at this point) and then have that loan forgiven as long as I don't lay myself off. And if forgiven I still won't owe taxes on it.

There must be a catch somewhere, or is this really free money?
It's not free money. It is money the government is giving you if you are unable to keep your employees (including yourself) because your revenue is reduced or totally eliminated due to the restrictions in place, which is of no fault of yours, and the money is used for payments you need to cover. It's a trade off between the economy running off a cliff or softening the blow.
So there's means testing for the corporation involved?

That isn't apparent from anything that I've seen but this is very new.

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 12:41 pm

MP123 wrote:
Sat Mar 28, 2020 11:58 am
So, it sounds like as an S-Corp owner I could apply for a loan to cover 2 months of payroll (at this point) and then have that loan forgiven as long as I don't lay myself off. And if forgiven I still won't owe taxes on it.

There must be a catch somewhere, or is this really free money?
We really have to wait for IRS/DOL to give actual guidelines - it sounds like S-Corp owners have a huge advantage, on the amount of PPP 7(a) loan given and forgiven, over sole proprietor’s, the way it is interpreted.

I don’t think the intent of the law was to continue wages for s-Corp owners and employees and screw sole proprietors - so, I think the actual interpretation will fix it.

P.S: IRS/DOL interpretation of certain aspects of ‘Families First Coronavirus Act’ was 180 degree to how most experts interpreted the law.

theplayer11
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by theplayer11 » Sat Mar 28, 2020 12:44 pm

Husband and wife Scorp owners, no other employees. We sell goods primarily to a state that is now shut down, but our state of residence is not. What are our options?
Can't go on unemployment because business is not "totally" shut down. Could we apply for loan to pay ourselves?
What I think is lacking in this bill is help for husband and wife scorp owners or single member scorp owners who generate all their income from the scorp. Our problem is all the lost revenue that can't be made up. Most w2 employees will get unemployment plus $600/week or get paid by their employers who are able to get a loan which turns into a grant.

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 12:51 pm

Conflicting information on various provisions - some of them.

- If you apply for SBA- EIDL and get the $10k advance which is forgiven, plus the extra non-forgiven part, how does each of that impact the SBA 7(a) PPP Loan and it’s forgiven portion.

- The ‘enhanced’ unemployment now allows self-employed to be eligible, where as they were not eligible before. Who does this apply to? Unincorporated, sole proprietor LLC, S-Corp, C-Corp?

Etc.

ShadowRegent
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by ShadowRegent » Sat Mar 28, 2020 12:51 pm

Reading the CARES act, it was unclear to me whether a self-employed person previously making over $100,000 is capped at using $100k as their "salary" or if being over $100k excludes them entirely for the PPA. Has anyone seen any guidance or does anyone have an interpretation on this?
Last edited by ShadowRegent on Sat Mar 28, 2020 12:56 pm, edited 1 time in total.

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 12:56 pm

Does anyone know what is “a covered loan under section 7(a)(36) of the Small Business Act”...Is it an old loan like the SBA disaster loan or something new?

I think it is the PPP loan.
Last edited by gilgamesh on Sat Mar 28, 2020 1:03 pm, edited 1 time in total.

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 12:56 pm

ShadowRegent wrote:
Sat Mar 28, 2020 12:51 pm
Reading the CARES act, it was unclear to me whether f a self-employed person previously making over $100,000 is capped at using $100k as their "salary" or if being over $100k excludes them entirely for the PPA. Has anyone seen any guidance or does anyone have an interpretation on this?
Conflicting reports on this too

Allan
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Allan » Sat Mar 28, 2020 1:04 pm

I found this to be fairly in depth but an easy ready explaining the bill.

https://www.sbc.senate.gov/public/_cach ... p4sZwSYs3U

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 1:34 pm

fundus wrote:
Sat Mar 28, 2020 12:11 pm
Theseus wrote:
Sat Mar 28, 2020 11:29 am

From the bill.

(A) IN GENERAL.—The amount of loan
forgiveness under this section shall be reduced, but not increased, by multiplying the amount described in subsection (b) by the quotient obtained by dividing—
(i) the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period; by
(ii)(I) at the election of the borrower
(aa) the average number of full- time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019; or
(bb) the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on January 1, 2020 and ending on February 29, 2020;
Yes, but I think the "covered period" starts the day your loan closes. So as long as you rehire all your employees by the closing
date, your ratio would be 1:1.

"To encourage employers to rehire workers laid off due to the COVID-19 crisis, employers that rehire previously laid-off workers will not be penalized for having a reduced payroll at the beginning of the forgiveness period. If, during the period from February 15, 2020, through 30 days after enactment of the CARES Act, there is either a reduction in the number of or wages paid to FTE employees and the employer eliminates the reduction by June 30, 2020, the amount of loan forgiveness will be determined without regard to the reduction."

from: https://arentfox.com/perspectives/alert ... on-program
But then perhaps they will loose out on Employee Retention Credit - which could be substantial. It is 50% of qualified wages up to $10,000 for the year. $5000 in credit is probably worth around $20,000 in income at 25% tax rate - I think. Like everything else they have to calculate to see what will be beneficial.

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 1:46 pm

theplayer11 wrote:
Sat Mar 28, 2020 12:44 pm
Husband and wife Scorp owners, no other employees. We sell goods primarily to a state that is now shut down, but our state of residence is not. What are our options?
Can't go on unemployment because business is not "totally" shut down. Could we apply for loan to pay ourselves?
What I think is lacking in this bill is help for husband and wife scorp owners or single member scorp owners who generate all their income from the scorp. Our problem is all the lost revenue that can't be made up. Most w2 employees will get unemployment plus $600/week or get paid by their employers who are able to get a loan which turns into a grant.
From what I am reading, you can apply for loan under EIDL that will give you $10,000 forgiveness. And then you can apply for PPP that will give you loan forgiveness for payroll cost, rent/lease/mortgage interest, utilities. Then you still may be able to get employee retention credits.

I am surprised how uniformly it is treating small businesses, s-corps, sole proprietors, independent contractors. At least from the reading so far.

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 1:47 pm

Theseus wrote:
Sat Mar 28, 2020 1:34 pm
fundus wrote:
Sat Mar 28, 2020 12:11 pm
Theseus wrote:
Sat Mar 28, 2020 11:29 am

From the bill.

(A) IN GENERAL.—The amount of loan
forgiveness under this section shall be reduced, but not increased, by multiplying the amount described in subsection (b) by the quotient obtained by dividing—
(i) the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period; by
(ii)(I) at the election of the borrower
(aa) the average number of full- time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019; or
(bb) the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on January 1, 2020 and ending on February 29, 2020;
Yes, but I think the "covered period" starts the day your loan closes. So as long as you rehire all your employees by the closing
date, your ratio would be 1:1.

"To encourage employers to rehire workers laid off due to the COVID-19 crisis, employers that rehire previously laid-off workers will not be penalized for having a reduced payroll at the beginning of the forgiveness period. If, during the period from February 15, 2020, through 30 days after enactment of the CARES Act, there is either a reduction in the number of or wages paid to FTE employees and the employer eliminates the reduction by June 30, 2020, the amount of loan forgiveness will be determined without regard to the reduction."

from: https://arentfox.com/perspectives/alert ... on-program
But then perhaps they will loose out on Employee Retention Credit - which could be substantial. It is 50% of qualified wages up to $10,000 for the year. $5000 in credit is probably worth around $20,000 in income at 25% tax rate - I think. Like everything else they have to calculate to see what will be beneficial.
Employee retention credit cannot be granted if the employer also gets a covered loan under section 7(a)(36) of the Small Business Act - I just don’t know what this means (thus my previous question)

Do you know what that means?

I have a feeling it is either ‘The employer retention credit’, refundable credit cannot be combined with PPP 7(a) or the $10k EIDL $10k advance...

Do you know how these 3 interact with one another?

Nyc10036
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Nyc10036 » Sat Mar 28, 2020 1:49 pm

I am still not sure how to navigate this.

I am a sole proprietor. My contract ended in Dec 31, 2019. I was paid on 1099.
I am looking for new work, but that is generally takes a long time even before Covid-19.

Do I apply for unemployment now?

Do I apply for a EIDL loan now and immediately get the $10K advance which does not need to be repaid?
Then immediately cancel the loan thereby keeping the $10K?

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 1:52 pm

gilgamesh wrote:
Sat Mar 28, 2020 1:47 pm
Theseus wrote:
Sat Mar 28, 2020 1:34 pm
fundus wrote:
Sat Mar 28, 2020 12:11 pm
Theseus wrote:
Sat Mar 28, 2020 11:29 am

From the bill.

(A) IN GENERAL.—The amount of loan
forgiveness under this section shall be reduced, but not increased, by multiplying the amount described in subsection (b) by the quotient obtained by dividing—
(i) the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period; by
(ii)(I) at the election of the borrower
(aa) the average number of full- time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019; or
(bb) the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on January 1, 2020 and ending on February 29, 2020;
Yes, but I think the "covered period" starts the day your loan closes. So as long as you rehire all your employees by the closing
date, your ratio would be 1:1.

"To encourage employers to rehire workers laid off due to the COVID-19 crisis, employers that rehire previously laid-off workers will not be penalized for having a reduced payroll at the beginning of the forgiveness period. If, during the period from February 15, 2020, through 30 days after enactment of the CARES Act, there is either a reduction in the number of or wages paid to FTE employees and the employer eliminates the reduction by June 30, 2020, the amount of loan forgiveness will be determined without regard to the reduction."

from: https://arentfox.com/perspectives/alert ... on-program
But then perhaps they will loose out on Employee Retention Credit - which could be substantial. It is 50% of qualified wages up to $10,000 for the year. $5000 in credit is probably worth around $20,000 in income at 25% tax rate - I think. Like everything else they have to calculate to see what will be beneficial.
Employee retention credit cannot be granted if the employer also gets a covered loan under section 7(a)(36) of the Small Business Act - I just don’t know what this means (thus my previous question)

Do you know what that means?

I have a feeling it is either ‘The employer retention credit’, refundable credit cannot be combined with PPP 7(a) or the $10k EIDL $10k advance...

Do you know how these 3 interact with one another?
I can't figure retention credit treatment myself. Still reading the bill. But this is a valid question.

However I am reasonably certain that $10k EIDL advance will be forgiven irrespective of loan approval OR it is rolled into the PPP forgiveness amount (deduct from total forgiveness amount under PPP). As the language seems to indicate/encourage refinancing EIDL with PPP.

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 1:52 pm

Theseus wrote:
Sat Mar 28, 2020 1:46 pm
theplayer11 wrote:
Sat Mar 28, 2020 12:44 pm
Husband and wife Scorp owners, no other employees. We sell goods primarily to a state that is now shut down, but our state of residence is not. What are our options?
Can't go on unemployment because business is not "totally" shut down. Could we apply for loan to pay ourselves?
What I think is lacking in this bill is help for husband and wife scorp owners or single member scorp owners who generate all their income from the scorp. Our problem is all the lost revenue that can't be made up. Most w2 employees will get unemployment plus $600/week or get paid by their employers who are able to get a loan which turns into a grant.
From what I am reading, you can apply for loan under EIDL that will give you $10,000 forgiveness. And then you can apply for PPP that will give you loan forgiveness for payroll cost, rent/lease/mortgage interest, utilities. Then you still may be able to get employee retention credits.

I am surprised how uniformly it is treating small businesses, s-corps, sole proprietors, independent contractors. At least from the reading so far.
EIDL has specific qualified use, including payroll...there’s no way the same payroll can be applied to all 3...but, I am wondering whether payroll can be applied to ERC, and other qualified expenses to the $10k EIDL and 7(a)....not duplicate, but are we allowed to spread the expenses over the 3, or not?

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 1:56 pm

Theseus wrote:
Sat Mar 28, 2020 1:52 pm
gilgamesh wrote:
Sat Mar 28, 2020 1:47 pm
Theseus wrote:
Sat Mar 28, 2020 1:34 pm
fundus wrote:
Sat Mar 28, 2020 12:11 pm
Theseus wrote:
Sat Mar 28, 2020 11:29 am

From the bill.

(A) IN GENERAL.—The amount of loan
forgiveness under this section shall be reduced, but not increased, by multiplying the amount described in subsection (b) by the quotient obtained by dividing—
(i) the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period; by
(ii)(I) at the election of the borrower
(aa) the average number of full- time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019; or
(bb) the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on January 1, 2020 and ending on February 29, 2020;
Yes, but I think the "covered period" starts the day your loan closes. So as long as you rehire all your employees by the closing
date, your ratio would be 1:1.

"To encourage employers to rehire workers laid off due to the COVID-19 crisis, employers that rehire previously laid-off workers will not be penalized for having a reduced payroll at the beginning of the forgiveness period. If, during the period from February 15, 2020, through 30 days after enactment of the CARES Act, there is either a reduction in the number of or wages paid to FTE employees and the employer eliminates the reduction by June 30, 2020, the amount of loan forgiveness will be determined without regard to the reduction."

from: https://arentfox.com/perspectives/alert ... on-program
But then perhaps they will loose out on Employee Retention Credit - which could be substantial. It is 50% of qualified wages up to $10,000 for the year. $5000 in credit is probably worth around $20,000 in income at 25% tax rate - I think. Like everything else they have to calculate to see what will be beneficial.
Employee retention credit cannot be granted if the employer also gets a covered loan under section 7(a)(36) of the Small Business Act - I just don’t know what this means (thus my previous question)

Do you know what that means?

I have a feeling it is either ‘The employer retention credit’, refundable credit cannot be combined with PPP 7(a) or the $10k EIDL $10k advance...

Do you know how these 3 interact with one another?
I can't figure retention credit treatment myself. Still reading the bill. But this is a valid question.

However I am reasonably certain that $10k EIDL advance will be forgiven irrespective of loan approval OR it is rolled into the PPP forgiveness amount (deduct from total forgiveness amount under PPP). As the language seems to indicate/encourage refinancing EIDL with PPP.
$10k EIDL is first based off of credit score and indeed will be distributed even if the underlying loan is denied....the $10k and the underlying SBA - disaster relief loan has nothing to do with the SBA PPP 7(a) loan - that's a separate Loan (not applied vis the SBA website...approved lenders will be announced) which has not even been set-up.

It’s not clear now how the SBA EIDL applied via the SBA website mesh with the SBA 7(a) PPP Loan that we will be applying once approved banks are announced.

Topic Author
Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 1:59 pm

gilgamesh wrote:
Sat Mar 28, 2020 1:52 pm
Theseus wrote:
Sat Mar 28, 2020 1:46 pm
theplayer11 wrote:
Sat Mar 28, 2020 12:44 pm
Husband and wife Scorp owners, no other employees. We sell goods primarily to a state that is now shut down, but our state of residence is not. What are our options?
Can't go on unemployment because business is not "totally" shut down. Could we apply for loan to pay ourselves?
What I think is lacking in this bill is help for husband and wife scorp owners or single member scorp owners who generate all their income from the scorp. Our problem is all the lost revenue that can't be made up. Most w2 employees will get unemployment plus $600/week or get paid by their employers who are able to get a loan which turns into a grant.
From what I am reading, you can apply for loan under EIDL that will give you $10,000 forgiveness. And then you can apply for PPP that will give you loan forgiveness for payroll cost, rent/lease/mortgage interest, utilities. Then you still may be able to get employee retention credits.

I am surprised how uniformly it is treating small businesses, s-corps, sole proprietors, independent contractors. At least from the reading so far.
EIDL has specific qualified use, including payroll...there’s no way the same payroll can be applied to all 3...but, I am wondering whether payroll can be applied to ERC, and other qualified expenses to the $10k EIDL and 7(a)....not duplicate, but are we allowed to spread the expenses over the 3, or not?
You are right. It can't be applied to the same payroll. But what I read leads me to believe that you can stack them. Here is the Q&A I saw,

If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan?
Answer:
Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 2:11 pm

Theseus wrote:
Sat Mar 28, 2020 1:59 pm
gilgamesh wrote:
Sat Mar 28, 2020 1:52 pm
Theseus wrote:
Sat Mar 28, 2020 1:46 pm
theplayer11 wrote:
Sat Mar 28, 2020 12:44 pm
Husband and wife Scorp owners, no other employees. We sell goods primarily to a state that is now shut down, but our state of residence is not. What are our options?
Can't go on unemployment because business is not "totally" shut down. Could we apply for loan to pay ourselves?
What I think is lacking in this bill is help for husband and wife scorp owners or single member scorp owners who generate all their income from the scorp. Our problem is all the lost revenue that can't be made up. Most w2 employees will get unemployment plus $600/week or get paid by their employers who are able to get a loan which turns into a grant.
From what I am reading, you can apply for loan under EIDL that will give you $10,000 forgiveness. And then you can apply for PPP that will give you loan forgiveness for payroll cost, rent/lease/mortgage interest, utilities. Then you still may be able to get employee retention credits.

I am surprised how uniformly it is treating small businesses, s-corps, sole proprietors, independent contractors. At least from the reading so far.
EIDL has specific qualified use, including payroll...there’s no way the same payroll can be applied to all 3...but, I am wondering whether payroll can be applied to ERC, and other qualified expenses to the $10k EIDL and 7(a)....not duplicate, but are we allowed to spread the expenses over the 3, or not?
You are right. It can't be applied to the same payroll. But what I read leads me to believe that you can stack them. Here is the Q&A I saw,

If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan?
Answer:
Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.
This has been my understanding as well and that’s why I applied for EIDL 2 days ago, expecting to get the $10k grant now...then deduct that from whatever grant I may get via the 7(a) loan which I will apply once approved lenders are listed...(however, many are worried, applying for EIDL disqualifies you from alloying for the 7(a) loan - some experts are saying that too)

What does your research say about how these two mesh with ‘Employer Retention Credit’? I am clueless on that.

P.S: where did you get that Q&A...please post a link

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 2:21 pm

gilgamesh wrote:
Sat Mar 28, 2020 2:11 pm
Theseus wrote:
Sat Mar 28, 2020 1:59 pm
gilgamesh wrote:
Sat Mar 28, 2020 1:52 pm
Theseus wrote:
Sat Mar 28, 2020 1:46 pm
theplayer11 wrote:
Sat Mar 28, 2020 12:44 pm
Husband and wife Scorp owners, no other employees. We sell goods primarily to a state that is now shut down, but our state of residence is not. What are our options?
Can't go on unemployment because business is not "totally" shut down. Could we apply for loan to pay ourselves?
What I think is lacking in this bill is help for husband and wife scorp owners or single member scorp owners who generate all their income from the scorp. Our problem is all the lost revenue that can't be made up. Most w2 employees will get unemployment plus $600/week or get paid by their employers who are able to get a loan which turns into a grant.
From what I am reading, you can apply for loan under EIDL that will give you $10,000 forgiveness. And then you can apply for PPP that will give you loan forgiveness for payroll cost, rent/lease/mortgage interest, utilities. Then you still may be able to get employee retention credits.

I am surprised how uniformly it is treating small businesses, s-corps, sole proprietors, independent contractors. At least from the reading so far.
EIDL has specific qualified use, including payroll...there’s no way the same payroll can be applied to all 3...but, I am wondering whether payroll can be applied to ERC, and other qualified expenses to the $10k EIDL and 7(a)....not duplicate, but are we allowed to spread the expenses over the 3, or not?
You are right. It can't be applied to the same payroll. But what I read leads me to believe that you can stack them. Here is the Q&A I saw,

If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan?
Answer:
Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.
This has been my understanding as well and that’s why I applied for EIDL 2 dats ago, expecting to get the $10 grant now...then deduct that from whatever grant I may get via the 7(a) loan which I will apply...(however, many are worried, applying for EIDL disqualifies you from alloying for the 7(a) loan - some experts are saying that too)

What does your research say about how these two mesh with ‘Employer Retention Credit’? I am clueless on that.

P.S: where did you get that Q&A...please post a link
Under the PPP language of the law it says following (among other) is excluded from forgiveness.
"(bb) taxes imposed or with- held under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period;"

I did a quick google search to see what is Chapter 21. It seems like these chapters are related to the federal tax.


The Employee Retention Credit is specifically states
"(2) CREDIT LIMITED TO EMPLOYMENT
TAXES.—The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the applicable employment taxes (reduced by any credits allowed under subsections (e) and (f) of section 3111 of the Internal Revenue Code of 1986 and sections 7001 and 7003 of the Families First Coronavirus Response Act) on the wages paid with respect to the employment of all the employees of the eligible employer for such calendar quarter."

So it seems is a credit just for taxes that were paid as part of the wages. If that is the case, then there are two different things. And I have a strong feeling that both PPP forgiveness and Retention Credit will be allowed.

But you are right, we should wait for the IRS guidance.

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Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 2:33 pm

Nyc10036 wrote:
Sat Mar 28, 2020 1:49 pm
I am still not sure how to navigate this.

I am a sole proprietor. My contract ended in Dec 31, 2019. I was paid on 1099.
I am looking for new work, but that is generally takes a long time even before Covid-19.

Do I apply for unemployment now?

Do I apply for a EIDL loan now and immediately get the $10K advance which does not need to be repaid?
Then immediately cancel the loan thereby keeping the $10K?
Hard to give specific recommendations without knowing all specifics and we are still figuring things out. But I would pretty much do what you describe. Except may be canceling the loan - just in case. It will 3.75% interest. Keeping it for a few months may not be a bad idea. Then refinance it with PPP when you get a job and use PPP forgiveness. Not sure that will be allowed but if it is then that seems to be a good route.

Bosro
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Bosro » Sat Mar 28, 2020 2:41 pm

Image

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 3:05 pm

Bosro wrote:
Sat Mar 28, 2020 2:41 pm
Image
What if expenses until 3rd week of June is used for the EIDL $10k grant, then from the 4th week of June (within the June 30th deadline) for 8 weeks the 7(a) loan is used? Will the $10k still be deducted from the 7 (a) forgiven portion, even though the expenses did not overlap?

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sat Mar 28, 2020 3:18 pm

I have two small businesses, with two different tax ID? Both registered/incorporated as an LLC, but for tax purposes are a sole proprietor (as LLC is a disregarded entity for tax our spouses).

Will I qualify for two $10k EIDL grants, one for each tax ID?

Does anyone know?

Stormbringer
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Stormbringer » Sat Mar 28, 2020 3:41 pm

“(E) MAXIMUM LOAN AMOUNT.—During the covered period, with respect to a covered loan, the maximum loan amount shall be the lesser of—

“(i) (I) the sum of—

“(aa) the product obtained by multiplying—

“(AA) the average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made, except that, in the case of an applicant that is seasonal employer, as determined by the Administrator, the average total monthly payments for payroll shall be for the 12-week period beginning February 15, 2019, or at the election of the eligible recipient, March 1, 2019, and ending June 30, 2019; by

“(BB) 2.5; and
Wow, I have about $65K per month in payroll. So this is basically a free grant for 2.5 times that amount?

I'm curious what happens after the $350 billion is gone. It seems to me like that could be gone rather quickly.
"Compound interest is the most powerful force in the universe." - Albert Einstein

Nyc10036
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Nyc10036 » Sat Mar 28, 2020 4:04 pm

Theseus wrote:
Sat Mar 28, 2020 2:33 pm
Nyc10036 wrote:
Sat Mar 28, 2020 1:49 pm
I am still not sure how to navigate this.

I am a sole proprietor. My contract ended in Dec 31, 2019. I was paid on 1099.
I am looking for new work, but that is generally takes a long time even before Covid-19.

Do I apply for unemployment now?

Do I apply for a EIDL loan now and immediately get the $10K advance which does not need to be repaid?
Then immediately cancel the loan thereby keeping the $10K?
Hard to give specific recommendations without knowing all specifics and we are still figuring things out. But I would pretty much do what you describe. Except may be canceling the loan - just in case. It will 3.75% interest. Keeping it for a few months may not be a bad idea. Then refinance it with PPP when you get a job and use PPP forgiveness. Not sure that will be allowed but if it is then that seems to be a good route.
Thank you.

Topic Author
Theseus
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Theseus » Sat Mar 28, 2020 5:30 pm

Stormbringer wrote:
Sat Mar 28, 2020 3:41 pm
“(E) MAXIMUM LOAN AMOUNT.—During the covered period, with respect to a covered loan, the maximum loan amount shall be the lesser of—

“(i) (I) the sum of—

“(aa) the product obtained by multiplying—

“(AA) the average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made, except that, in the case of an applicant that is seasonal employer, as determined by the Administrator, the average total monthly payments for payroll shall be for the 12-week period beginning February 15, 2019, or at the election of the eligible recipient, March 1, 2019, and ending June 30, 2019; by

“(BB) 2.5; and
Wow, I have about $65K per month in payroll. So this is basically a free grant for 2.5 times that amount?

I'm curious what happens after the $350 billion is gone. It seems to me like that could be gone rather quickly.
So it's not only salaries. But it includes commission, health insurance cost, Retirement plan contributions, local and state taxes. But total annualized compensation above $100,000 has to be deducted from the total. Then you multiply by 2.5 to get maximum allowable loan.

harikaried
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by harikaried » Sun Mar 29, 2020 3:20 am

For self-employed / sole-proprietors / single-member LLC with no employees, would generally calculating a monthly 1099-MISC income then multiply by 2.5x get the maximum loan amount? E.g., 2019 1099-MISC box 7 Nonemployee compensation of $60k should mean a loan -> grant of $12.5k? How does this then get counted as an allowable use?

Similarly, does this then also apply to 1099-MISC box 1 Rents income to cover potentially lost rental income because the tenant's business is closed? The allowed use seems to include mortgage interest. But similar to above, there's no "employee salary"… Or for rental business, rental income is not considered compensation?

Then on the flip side as the tenant with no employees, Rent is an allowed use, but is that included in the base to calculate 2.5x for loan amount? Or the loan would be based on the monthly income from services that were previously provided (but not 1099-MISC)?

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sun Mar 29, 2020 8:38 am

gilgamesh wrote:
Sat Mar 28, 2020 12:41 pm
MP123 wrote:
Sat Mar 28, 2020 11:58 am
So, it sounds like as an S-Corp owner I could apply for a loan to cover 2 months of payroll (at this point) and then have that loan forgiven as long as I don't lay myself off. And if forgiven I still won't owe taxes on it.

There must be a catch somewhere, or is this really free money?
We really have to wait for IRS/DOL to give actual guidelines - it sounds like S-Corp owners have a huge advantage, on the amount of PPP 7(a) loan given and forgiven, over sole proprietor’s, the way it is interpreted.

I don’t think the intent of the law was to continue wages for s-Corp owners and employees and screw sole proprietors - so, I think the actual interpretation will fix it.

P.S: IRS/DOL interpretation of certain aspects of ‘Families First Coronavirus Act’ was 180 degree to how most experts interpreted the law.
This was clearly incorrect on my part, it clearly states sole proprietor income upto $100k is counted
Last edited by gilgamesh on Sun Mar 29, 2020 8:42 am, edited 1 time in total.

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sun Mar 29, 2020 8:41 am

Can someone explain what 12 months they are talking about? Say if my loan was approved on May 1st, 2020....What is meant by ‘loan is made’?
Thanks

The law as written -

“MAXIMUM LOAN AMOUNT.—During the covered period, with respect to a covered loan, the maximum loan amount shall be the lesser of—

“(i) (I) the sum of—

“(aa) the product obtained by multiplying—

“(AA) the average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made,

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sun Mar 29, 2020 8:59 am

gilgamesh wrote:
Sun Mar 29, 2020 8:41 am
Can someone explain what 12 months they are talking about? Say if my loan was approved on May 1st, 2020....What is meant by ‘loan is made’?
Thanks

The law as written -

“MAXIMUM LOAN AMOUNT.—During the covered period, with respect to a covered loan, the maximum loan amount shall be the lesser of—

“(i) (I) the sum of—

“(aa) the product obtained by multiplying—

“(AA) the average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made,
————————————————





Senator Mendez has a different way - where did feb/15 - June 30 come in?

How is the PPP loan size determined?

Depending on your business’s situation, the loan size will be calculated in different ways (see below). The maximum loan size is always $10 million.

If you were in business February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs during that time period........


https://www.menendez.senate.gov/coronav ... igetaneidl

Allan
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Allan » Sun Mar 29, 2020 10:24 am

I meet all requirements for a PPP loan. However, I am reading in the bill the following:

"Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020."

I am in a business that has gone completely dark (home building), hardly anyone is considering building or buying new homes now. Just not sure how a small builder quantifies as proof they have "been harmed". I am busy building custom homes I had under contract before this all started, have not and don't expect to terminate any employees, but new business is non-existent now.

Allan

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Sun Mar 29, 2020 1:44 pm

gilgamesh wrote:
Sun Mar 29, 2020 8:41 am
Can someone explain what 12 months they are talking about? Say if my loan was approved on May 1st, 2020....What is meant by ‘loan is made’?
Thanks

The law as written -

“MAXIMUM LOAN AMOUNT.—During the covered period, with respect to a covered loan, the maximum loan amount shall be the lesser of—

“(i) (I) the sum of—

“(aa) the product obtained by multiplying—

“(AA) the average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made,
This is critical, as if the 250% of the mouthy average is of previous 12 months, and if this previous 12 months starts on the day loan is granted, and that this loan has to be used within the following 8 weeks, there’s a tremendous balancing act that’s needed.

For instance, for each month the business has been closed prior to initiating the loan, the principle loan amount will be lowered by 1/12th - then one has to figure whether waiting for the business to open is worth it (or apply and pay employees and owner as we stay at home) when it’s lowering (your $100k over 2 months is lowering, assuming owner income of at least $100k) the principle loan amount possible.

Which 12 months is considered to calculate the 7 (a) PPP loan amount (which is then added to existing EIDL loan)...please read at the actual act/law and provide answer.

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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by kandycecudjo » Sun Mar 29, 2020 10:13 pm

My husband and I quality for the PPP loan program but have a few questions.

-- How do they know how much we make per month? Is it based on last year's taxes?
-- How do they know we are spending the money on the things that meet the requirements so the loan is forgiven?

We want to make sure we take out the exact amount that will be forgiven and don't end up owing the bank. We are only looking to take out the exact amount that will be forgiven.

Any advise?

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Harry Livermore
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by Harry Livermore » Mon Mar 30, 2020 6:58 am

Theseus wrote:
Sat Mar 28, 2020 10:09 am
I have been reading up on this through various sources as I am going to be helping many businesses through my volunteering at SCORE.
Hi Theseus,
Thank you for starting this thread, and thank you for volunteering at SCORE. My dad did that after he retired, and it gave him great satisfaction. After he died there was a terrific outpouring of praise from owners of small businesses that he had helped.
I'm a one-person LLC which simply acts as a passthrough entity. Income is my labor, or equipment rental, or a combination. I have adequate capital in the business to weather this storm but have monthly obligations including equipment lease payments and rent. Business income has gone to zero as a result of enforced social distancing.
I don't think that PPP is a viable source of assistance since I don't pay myself a salary. In addition, I sometimes get paid by employers via W2 (lengthy explanation that I need not go into here) so I filed for unemployment even though the state amount will be peanuts... I was looking to capture the $600 federal overlay. I still think that's the proper and ethical approach to "salary" for my circumstance.
However, the EIDL "forgivable" $10K loan is intriguing. The PDF, linked by Allan (thank you!) indicates "To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance..." Have you gone through the process with a client yet? How, exactly, does one "request the advance"?
Cheers

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gilgamesh
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by gilgamesh » Mon Mar 30, 2020 7:06 am

kandycecudjo wrote:
Sun Mar 29, 2020 10:13 pm
My husband and I quality for the PPP loan program but have a few questions.

-- How do they know how much we make per month? Is it based on last year's taxes?
-- How do they know we are spending the money on the things that meet the requirements so the loan is forgiven?

We want to make sure we take out the exact amount that will be forgiven and don't end up owing the bank. We are only looking to take out the exact amount that will be forgiven.

Any advise?
It’s no interest for 6 months and no pre-pay penalty. You should be able to just repay the excess within that time, as forgiveness period is only 8 weeks after disbursement.

theplayer11
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by theplayer11 » Mon Mar 30, 2020 7:45 am

In regards to PPP loan, what if an scorp runs a payroll just 4 times a year? Could scorp owner front load his entire payroll during the 8 weeks after the loan? Would contributions to a i401k be part of the loan forgiveness?

theplayer11
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Re: Stimulus help for small businesses, sole proprietors, s-corp etc

Post by theplayer11 » Mon Mar 30, 2020 7:48 am

Harry Livermore wrote:
Mon Mar 30, 2020 6:58 am
Theseus wrote:
Sat Mar 28, 2020 10:09 am
I have been reading up on this through various sources as I am going to be helping many businesses through my volunteering at SCORE.
Hi Theseus,
Thank you for starting this thread, and thank you for volunteering at SCORE. My dad did that after he retired, and it gave him great satisfaction. After he died there was a terrific outpouring of praise from owners of small businesses that he had helped.
I'm a one-person LLC which simply acts as a passthrough entity. Income is my labor, or equipment rental, or a combination. I have adequate capital in the business to weather this storm but have monthly obligations including equipment lease payments and rent. Business income has gone to zero as a result of enforced social distancing.
I don't think that PPP is a viable source of assistance since I don't pay myself a salary. In addition, I sometimes get paid by employers via W2 (lengthy explanation that I need not go into here) so I filed for unemployment even though the state amount will be peanuts... I was looking to capture the $600 federal overlay. I still think that's the proper and ethical approach to "salary" for my circumstance.
However, the EIDL "forgivable" $10K loan is intriguing. The PDF, linked by Allan (thank you!) indicates "To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance..." Have you gone through the process with a client yet? How, exactly, does one "request the advance"?
Cheers
The application is streamlined now and you just check a box if you want an advance on the $10k
https://covid19relief.sba.gov/#/

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