Josh LanceJosh Lance
UPDATE: What We Know Today

UPDATE: What We Know Today

As things continue to change with regards to the SBA loans, I wanted to update the information we sent out previously and provide additional details and information.  First an update on the four points from 4/02/20.

Apply for both the SBA Economic Disaster Loan (EIDL) and SBA Paycheck Protection Program Loan (PPP)

Yes- still definitely do this!  If you have received the EIDL prior to April 3, they want to roll that balance into the PPP, net of the $10k grant that people supposedly would have received.

You can have both the SBA EIDL and PPP at the same time… maybe?

Per the updated SBA guidelines released last night, you can have both loans at the same time as long as those loans are not both being used for payroll. So that is good news. There is still some conflicting information out there, but for now it seems holding both an EIDL loan and a PPP loan is OK.

A decision needs to be made between taking the PPP Loan and the Employer Retention Credit.

Yes- this is still true.  Here is the calculator if you want to run some different scenarios.

It’s possible that 1099 contractors are included in the PPP loan, but no certainty.

NO– this is a resounding no from the updated guidance. Only employees are included in the PPP calculation. However, we are seeing some banks still ask for 1099 information.

 

Here are some additional new things we learned or uncertainty thereof:

  • The calculation period for the PPP is calendar year 2019. It’s likely this was chosen because it’s easy to verify this information via 941s and 940s. However, that is not in line with the CARES Act.  This is causing confusion as different banks are asking for different timelines.
  • There is discussion of what makes up payroll costs in the updated guidance that largely sticks to what we have known.  However, there is language in there that talks about removing federal EE and ER taxes from payroll costs for the period of February 15, 2020- June 30, 2020.  Since the calculation period is not during that timeframe, this leads me to believe that for the forgiveness piece, the forgiveness amount will be based on Gross wages less federal EE and ER taxes, but not totally sure.
  • Payroll providers, in consultations with their lawyers believe that payroll costs should be less EE payroll taxes, including EE withholding. The AICPA along with some industry groups have issued guidance that payroll costs should be gross wages with no back out of EE payroll taxes.  Senator Marco Rubio also echoed that sentiment stating it was not the Senate’s intention that those EE payroll taxes reduce payroll costs.
  • The first day of applications for the SBA PPP loans was a bit chaotic to say the least.  Most banks struggled to take PPP applications, if they even did. Some banks only allowed you to submit forms stating that you were interested.

A couple of thoughts here:

  1. Try to apply with the bank you currently use.  Some banks are not allowing non-customers to apply or are not prioritizing non customers. 
  2. If your bank is not participating in the PPP, I would suggest that you work with a fintech lender like Lendio, Fundera, or Kabbage.  Some more of these fintech companies will be coming online this week for PPP loans, including Paypal, Mercury, Veem, Divvy, Bluevine,etc.  The benefit here is that they have the technology put in place to make the approval process easier than the traditional banks.
  3. Gusto has compiled a list of banks that are taking PPP loans and whether they are allowing non customers here.
  • One thing to note is that you can’t submit multiple final applications with a variety of financial institutions. You should go through as many available channels as you can, but once you sign and submit a final application, you can’t do the same elsewhere.
  • Also to note, self employed individuals and independent contractors (read this as businesses that file a schedule C and don’t have employees), the application window opens on April 10, pending final guidance and clarification from the SBA.

 

At this time, I would not be worried if you have not had a chance to submit an application yet as 1% of the funds available for PPP have been approved and sent out.  Bipartisan members of Congress have stated that their intention is to replenish the coffers of the PPP program should money run out. So don’t panic if you are getting nowhere with your bank or if your bank has not opened up applications yet.  We will probably also get a new round of guidance from the SBA here shortly too, so even if you did submit on Friday, you might need to resubmit pending that guidance.

If you have any questions, please feel free to reach out to us!

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About Josh Lance

A licensed certified public accountant (IL) and Chartered Global Management Accountant, Josh is also a family man who calls Chicago home.  Before venturing on his own with a mission to help small businesses, Josh spent his early career at a top-10 national public accounting firm before working at an ultra high net worth family office.  Josh is also an adjunct professor at Northwestern University in Evanston, IL.  He enjoys making wine at home, cooking, traveling, and cheering on his favorite football and soccer teams. Josh was honored by being selected to the 2017 class of the AICPA Leadership Academy and was named as one of the 40 under 40 in 2017 by CPA Practice Advisor.