The PPP Thread

[GastroMastro]

Hi, I am reviewing the PPP EZ Loan Forgiveness application: https://home.treasury.gov/system/fil...ion-3508EZ.pdf

I am confused by line 7 - if I calculated 60% of loan amount which is 16666.66*.6 = $10,000, then Line 8 seems to imply that my forgiveness is only $10,000, which is not correct. is this an error, anyone else having this issue?

[jacoavlu]

Any clarity on s-corp wages?

seems employee-owner forgiveness cap will be 2.5/12 of 2019 comp. I haven't researched but my question is still going to be how to health ins premiums and ER retirement play into that number.

If that 2.5/12 is a hard cap, then non owner employees may be getting bonuses, or else the biz probably leaves forgiveness funds on the table

[childay]

But now instead of $100,000/52 * 8 (a max of $15,385 per individual), you get up to $100,000/52 *24, making the new maximum forgiveness cap $46,154 per individual for 24 weeks.

Any clarity on s-corp wages?

[GasFIRE]

Not a gift. The IRS hasn’t updated or changed their position yet that the forgiven PPP loan is imputed income. Also interesting that for 24 weeks owners compensation is capped at $20,833 but if paid to an employee the cap is $46,154 (24 weeks of $100K annualized compensation). The saga continues.

[docnews]

More PPP clarity for sole proprietors:

https://www.forbes.com/sites/brianthompson1/2020/06/17/sba-finally-clarifies-ppp-loan-forgiveness-rules-full-forgiveness-for-self-employed-borrowers/#794164674110

Wow! So basically for sole proprietorships who received PPP it looks as if it's a $20,833 government gift and not even a loan! This is insane!!

[GasFIRE]

More PPP clarity for sole proprietors:

https://www.forbes.com/sites/brianthompson1/2020/06/17/sba-finally-clarifies-ppp-loan-forgiveness-rules-full-forgiveness-for-self-employed-borrowers/#794164674110

[Rando]

The maximum compensation through the PPP Loan for one employee was $15,384 ($100k/52 weeks x 8 weeks). Since the PPP was extended to 24 weeks, does the maximum compensation increase to $46,152 ($100k/52 weeks x 24 weeks) or is it still $15,384?

I think we're still waiting for the final guidelines to come out which likely will address that.

[countryphysician]

The maximum compensation through the PPP Loan for one employee was $15,384 ($100k/52 weeks x 8 weeks). Since the PPP was extended to 24 weeks, does the maximum compensation increase to $46,152 ($100k/52 weeks x 24 weeks) or is it still $15,384?

[jacoavlu]

A lot of businesses didn't have the choice to stay open during this time period though.

understood. It’s just the way the PPP morphed, some biz came out better than others.

For some biz the majority of the PPP funds are basically passed through to employees (paid while not open)

for others the funds end up being much more owner support (paid after re open)

[jhwkr542]

the way this has worked out, the employers who paid all their employees for 8 weeks or whatever while furloughed and business not open, kinda got screwed.

A lot of businesses didn't have the choice to stay open during this time period though.

[jacoavlu]

But that was the primary objective. Keep the business and staff in place and cause no harm. The PPP is to protect the small business owner paying employees. Not contractors, not vendors, not inventory. No a financing deal. W-2 payroll , keep it running and you will be forgiven. Guess not.

agree. “Screwed” is relative

owner who shut down, people went unemployment, then is able to rehire and use PPP funds during 24w period fares better than owner who used PPP funds to pay employees not to work.

[Tim]

the way this has worked out, the employers who paid all their employees for 8 weeks or whatever while furloughed and business not open, kinda got screwed.

But that was the primary objective. Keep the business and staff in place and cause no harm. The PPP is to protect the small business owner paying employees. Not contractors, not vendors, not inventory. No a financing deal. W-2 payroll , keep it running and you will be forgiven. Guess not.

[jacoavlu]

the way this has worked out, the employers who paid all their employees for 8 weeks or whatever while furloughed and business not open, kinda got screwed.

[Rando]

It might go without saying but:

Small businesses who received PPP funds and who were already planning to submit a forgiveness application with their bank will need to wait, as the SBA and Treasury will be updating guidance and the PPP forgiveness application. The good news for many small businesses is that the additional 16 weeks will provide more payroll cycles and will result in more PPP funds being forgiven. The changes to PPP in this new bill are significant and will allow more small businesses to benefit from this popular small-business relief effort.

I was considering doing a special payroll next week as that was when my 8 week PPP period ended, but it looks like it behooves everyone to just stick with their regular payroll schedule.

https://www.entrepreneur.com/article/351489

[Rthoma23]

I imagine they'll end up making the whole thing non-taxable because what about the businesses who are coming up on the end of the 8 week period who have basically spent the entire loan as initially planned? I assume most business created a separate account to allocate the money each payroll. Will they then allow any part of the loan already 'spent' on employee payroll to be put back into that account and then 'spent' on owner compensation? Seems like it creates a lot of unnecessary steps.

Great point