Today, the SBA began accepting applications from entities applying for the second round of PPP Lending. Here are the answers to some commonly asked questions.
Is there anything different about the application process?
Not much. The new application has questions to certify that you had a quarter during 2020 that was down twenty-five percent from the same quarter in 2019. Other than that, the process is similar.
Many lenders are forwarding a Docusign application that is already partially filled out with the information from your first PPP Loan. It doesn’t take more than a few minutes to put in the new information and submit it.
Do I need to get the first loan forgiven before getting the second?
No, but you do need to have used all of the proceeds from the first in order to qualify for the second. There is a question on the application asking you to affirm this fact.
Can I fill out the application and submit it to the SBA?
No. Once again, this 7(a) loan must go through a lender and they will have their own way of wanting it handled. Most have online portals for submission. Please follow their instructions in order to apply.
Can I still get the new PPP Loan if I don’t have a quarter that was down 25% in 2020?
No. You’re required to affirm and if necessary prove, that your sales are down at least 25% from a corresponding quarter in 2019. If you are up rather than down, forget about it.
Get your applications submitted today. If you have any questions, please contact us today.
Let me leave you with this.
There are significant planning opportunities still available in the fourth quarter that the PPP2 Legislation has created. The ability to now receive both the PPP and an Employer Retention Credit is creating interesting possibilities.
The ERC in 2020 requires W-2 income and provides a 50% refundable credit on up to $10,000 per employee. This cannot be claimed on payroll that is used for PPP Loan forgiveness and requires that you have a 50% reduction in income. If you had 10 employees in the fourth quarter where you paid each of them $10,000 and you meet the other requirements, we can get you a $50,000 credit.
This isn’t a loan. It’s a credit that doesn’t need to be repaid. You’ll have to pay income tax on it, but that’s it.
Maybe we’d even want to put your spouse on the payroll this quarter to pay them for all of the work they do for your company? We can even take that payroll out of the distribution you’ve already taken, in order to conserve your cash.
In that instance, you wouldn’t even need to pay the payroll tax of $1,530 per employee. You get a credit of $5,000, less the $1,530 in payroll taxes means that you get a check from the credit of $3,470 per qualifying employee. These aren’t easy to do. Don’t even try to do these yourself. They’re a nightmare. Please contact my offices today.
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
www.AccountingSolutionsLtd.com
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