While Congress and The White House continue negotiations on the newest stimulus bill, the SBA issued a new ten page document further clarifying the rules on forgiveness. We are still waiting to see whether or not all of the loans under $150,000 are going to be forgiven. There is strong bi-partisan support for The Payroll Protection Program Small Business Forgiveness Act which would automatically forgive these loans.
But there is also strong opposition at many levels of government given the amount of fraud which would be endemic if such a law were passed. One of our clients paid off a vacation property with their loan proceeds.
That being said, the new FAQ Document does answer many issues that were unresolved, including but not limited to…
1 – If you were a Sole Proprietor, Independent Contractor, or Self Employed Individual without any employees, you can use the 3508EZ for forgiveness.
2 – One of the given facts of the law is that we have ten months after the period of usage in order to submit our paperwork for forgiveness. This raises the question of whether or not a borrower must make payments on the loan, if forgiveness paperwork is filed timely, and the bank has not gotten back to us. The answer is no. Those payments do not need to be made while the bank is going over our paperwork.
3 – The document provides more definitions about payroll costs that can be forgiven in the second section. It provides examples for owners of S Corps, C Corps, Self Employed Schedule C, General Partners, and LLC Owners.
4 – The document also further defines reductions in forgiveness. Specifically it further defines how this can occur with reductions in Employee Salaries and hourly wages.
The full set of FAQ’s can be found at the following web address.
https://www.sba.gov/sites/default/files/2020-08/PPP%20Loan%20Forgiveness%20FAQs%208-4-20.pdf
Let me leave you with this one thought…
Things just seem to be dragging on. Washington is in a stalemate on how to proceed. Each side has valid arguments given their individual points of view. Our President has already said that he may need to act unilaterally.
Meanwhile, the C-10 Numbers seem to be increasing in many places. Our Governor and many of our Mayors are talking about shutting down even more businesses and moving backwards in the reopening plans.
I am sure that you are tired of thinking and worrying about all of these things. I know that I certainly am. But the worst thing that you could do would be to be caught flat-footed if they decided to again move backwards.
Contingency plans are necessary.
We have three plans in place. They are…
1 – If they continue on in the same manner for another year.
2 – If they shut things down again.
3 – And if one of our employees tests positive for C-19.
I would suggest that all of you think through all of those possibilities. If you can think of any more that we should prepare for, please let me know.
One of the real problems in all of this is fear. Being prepared and ready with contingency plans in place is one of the easiest ways to control or eliminate fear.
We’re all going to get through this. And realize that we are right there beside you to help in any way that we can.
Accounting Solutions Ltd. stands ready to complete our mission and purpose. If there is anything that you need, anything at all, we stand ready to serve. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
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773-267-7500
chris@accountingsolutionsltd.com
