The SBA and IRS updated the loan forgiveness forms and provided new forgiveness guidance on all PPP Loans below $150K. The updated Form 3508S can be found at the following web address.
It asks for the following information.
1 – Loan Amount and Disbursement Date
2 – Employee Totals
3 – Covered Period Dates
4 – The Amount of the Loan spent on Payroll
5 – The Amount of Forgiveness Requested
Borrowers are not required to submit any additional data but are required to keep it on file if requested in an audit. The form corrects the difficulties with the prior form in asking about the EIDL Grant and removing that portion from loan forgiveness.
Updated forms were also released for the 3508EZ and the standard 3508.
In further news, the SBA stated that it agreed to and disbursed the additional $5B in PPP2 money in the first week. Given the $284B allocated to the program, it doesn’t seem as if the money is going to run out half as fast as it did the first time. Since larger borrowers are excluded from this new program, the money will probably still be there when you ask for it.
Let me leave you with this.
There’s another planning opportunity that entrepreneurs should be considering. In many instances, the Employer Retention Credit can provide a lot more funding than the PPP in 2021.
Remember that the Employer Retention Credit was changed in the first two quarters of 2021. Now it is a 70% credit on the first $10,000 per employee, per quarter. If you can prove that your quarter is down 20% per quarter, then your business is eligible. The PPP2 legislation is allowing this for the first two quarters of 2021. The new administration may even extend it into the third and / or fourth quarters as well.
Please also remember that you cannot use the same payroll for PPP Loan Forgiveness that is used to claim the credit. These two items are mutually exclusive. So let’s go through some math.
In our sample case a business has five employees that make $10,000 per quarter each. Your business is down over 20% each quarter, so it qualifies for the retention credit.
If we get the PPP Loan then that’s $3,333.34 per month X five employees X 2.5 for a total loan amount of $41,667.
If we do the retention credit instead, then that’s a 70% credit on $10,000 per employee per quarter, or $7,000 X 5 employees X 2 quarters for a total of $70,000.
I need all of you thinking about this before you blindly accept the next PPP Loan. You might be hurting yourself.
Please let me know your thoughts. It’s been a long week, get some rest. Only whatever God you pray to has any idea what we’re all going to get hit with on Monday.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If there is anything you need, whether you are a current client or not, you have but to ask. I’m here and I remain
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
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