Can The Ppp Loan Be Deferred
Banks are required to provide complete payment deferment relief, including payment of principal, interest, and fees, through the date on which the approved PPP loan forgiveness amount is remitted to the bank, provided that if a borrower does not submit its PPP loan forgiveness request within 10 months after the end of the applicable PPP loan forgiveness period, then that borrower will be required to begin making principal and interest payments after the 10-month period. If the borrower does not submit a loan forgiveness application to the bank by May 12, 2022, the borrower must begin making payments on or after May 12, 2022.
What Is The Bottom Line Here
Capital Plus PPP Loans can help your business stay steady. You can pay salaries, cover mortgage interests, and also handle employee benefits and more with PPP Loans. Moreover, Capital Plus ensures that you don’t have to wait for weeks to get the loan.
You can get the approval within two business days and get the funds within six business days. This will let you get a beneficial head start and leave competitors behind in your dust. You can contact Capital Plus now and get more information.
Does My Business Have To Do Anything For The Ppp Loan To Be Forgiven
Yes. You will have to complete your forgiveness application through Square Capital. At least 60% of your PPP loan must be used for payroll costs and the remainder must only be used for qualifying non-payroll costs. Businesses have up to 24 weeks from the date you received the loan to spend the funds in a manner that is eligible for loan forgiveness.
If you lay off employees, the forgiveness amount will be reduced by the percentage decrease in your number of employees. If your total payroll expenses on workers making less than $100,000 annually decreases by more than 25%, the loan forgiveness amount will be reduced by the wage decrease exceeding 25%. If you laid off some employees or reduced employees wages, you can still be forgiven for the full amount of your payroll cost if you rehire your employees or restore their original wages by the end of your covered period. For loans under $50,000, you may still qualify for full forgiveness even if you have reduced your number of employees or decreased salaries and wages. For second draw loans, regardless of the size of your loan, you will be required to provide evidence that your business revenue decreased by at least 25% between 2019 and 2020.
If you do not apply for forgiveness and use the loan for these purposes you will have to pay back the loan.
How Does Sba Ppp Loan Forgiveness Work
Once you receive and use your PPP funds according to the aforementioned requirements, what can you expect for the loan forgiveness process? Much like the awarding of funds, the Small Business Administration wants to make loan forgiveness as easy and generous a process as possible to facilitate the health of American small businesses. However, the designed incentives need to be met. You will need to prove your compliance with the conditions and requirements of the PPP loans;
SBA loan forgiveness will be managed by your SBA-preferred lender. You will submit your PPP forgiveness application to the lender disbursing your PPP funds. Within 60 days the lender will return a loan forgiveness statement which will indicate the loan forgiveness amount and the terms for paying off any funds not eligible for forgiveness. PPP loans before June 5 have a two year term, and loans disbursed after the Flexibility Act will have five year terms.
Getting A Ppp Loan Without A Business
You dont have to have an LLC designation or a registered business to qualify for PPP loans. Sole proprietors, freelancers, and independent contractors can apply for PPP funding. ;
Calculate how much you could receive by using your 2019 or 2020 tax returns. Using either your annual gross income or net profit, divide by 12 to get your monthly income, then multiply by 2.5 to find the amount you may qualify to receive. ;
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Aicpa Asks For Guidance On S Corp And Partnership Ppp Loan Forgiveness
Taxpayers urgently need guidance on Paycheck Protection Program loan forgiveness issues, the AICPA has told the IRS, and the AICPA has made recommendations proposing solutions to those issues.
The proposed solutions came in a letter sent March 15 from the AICPA Tax Executive Committee to two members of the IRS Chief Counsels office, asking for additional guidance and making recommendations on how to apply the Consolidated Appropriations Act , 2021, P.L. 116-260, and specifically Section 276 of the COVID-Related Tax Relief Act of 2021, enacted as part of the CAA. Section 276 of the act provides that expenses paid with forgiven PPP funds are deductible, that PPP borrowers are not to reduce any tax attributes, and that no basis increase shall be denied by reason of the exclusion of PPP forgiveness from gross income. Section 276 also provides S corporation and partnership PPP borrowers instructions for the tax treatment of the amount excluded from gross income due to PPP loan forgiveness. With tax filing deadlines approaching, practitioners and taxpayers need additional guidance on these provisions.
The AICPAs Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.
Accounting firms can prepare and process applications for the PPP on the CPA Business Funding Portal, created by the AICPA, CPA.com, and fintech partner Biz2Credit.
To Write Off The Forgivable Portion Of The Loan:
The forgiven amount of the loan is not taxable, so its important to keep this amount categorized separately from the revenue your business has earned. When it comes time to file your taxes, you or your accountant can deduct this amount from your total revenue.
Once you know how much of the loan and interest you need to pay back, you can record those payments in one of these ways.
Also Check: When To Apply For Ppp Loan Forgiveness
Ppp Forgiveness For Self
You are entitled to use the PPP loan to replace lost compensation due to the impacts of COVID-19. You are eligible to claim 2.5 monthsâ worth of your 2019 or 2020 net income to replace pay. Loans received after March 3, 2021 can use their 2019 or 2020 gross income if they used their gross income to apply. If you didnât have any other payroll expenses factoring into your PPP loan amount, this means your entire PPP loan could be forgiven for the 24-week period.
If you are using an 8-week forgiveness period, you can claim 8 weeksâ worth of your 2019 or 2020 net income or gross income as owner compensation replacement . The remaining PPP funds will need to be spent on other eligible expenses in order to be forgiven. Using a covered period of at least 11 weeks will let you take the full 2.5 months of net income or gross income.
In order to submit mortgage interest, rent, or utilities expenses for forgiveness, you must have claimed a deduction for those expenses on your 2019 Form 1040 Schedule C.
For example, in 2019 you worked in an office space and did not have a home office. Because you didnât work from home, you could not have claimed a 2019 deduction for your home mortgage interest. Therefore, even if you are currently working at home now, you are not eligible to submit home mortgage interest payments for forgiveness.
Further reading:Self-Employed Guide to the PPP Forgiveness Application
Will Fhlbs Accept Ppp Loans As Collateral For Fhlb Advances
The Federal Housing Finance Agency confirmed that Federal Home Loan Banks may accept PPP loans as collateral when making advances to their member banks. This move is intended to provide additional liquidity for small banks in particular, as they work to meet the needs of small businesses in their communities.
FHLBs will take a discount of at least 10% on PPP loans accepted as collateral, which will reduce the overall value of such collateral. Additionally, member banks pledging PPP loans as collateral must have a CAMELS rating of 3 or better, or a member credit ranking in the top 60% of FHLBs member rating systems. FHLB member banks may pledge a maximum of $5 billion in PPP loans as collateral to their FHLB.
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To 24 Weeks Of Expense Coverage
Expenses eligible for forgiveness are those that are incurred over the 8 to 24 week period, starting from the day you receive your PPP loan from your lender. This is not necessarily the date on which you signed your loan agreement.
You do not need to adjust your payroll schedule. All payroll that your employees incur over the 8 to 24 week period is eligible for forgiveness, even if the actual payout date falls outside the covered period.
What Are The Record Keeping Requirements
Borrowers will be required to submit certain documentation with their loan forgiveness application:
- Bank account statement or third-party payroll service provider reports documenting cash compensation paid to employees,
- Tax forms or equivalent third-party payroll service provider reports for periods overlapping with the 24-week period for: payroll tax filings , and state quarterly wage reporting and unemployment insurance tax filings, and
- Payment receipts, cancelled checks, or account statements documenting payment of employer contributions to employee health insurance and retirement plan.
Full-Time Employees :
- Documentation showing the number of FTEs for the reference period from Step 2. Documents may include payroll tax filings and state quarterly wage reporting and unemployment insurance tax filings.
- Business mortgage interest payments: amortization schedule and cancelled checks or lender account statements from February 2020 and covering the 24-week period.
- Business rent and lease payments: Copy of current lease and receipts or cancelled checks or lessor account statements from February 2020 and covering the 24-week period.
- Business utility payments: Copy of invoices from February 2020 and the 24-week period and receipts, cancelled checks, or account statements
WHAT IS THE DEADLINE FOR APPLYING FOR FORGIVENESS?
Principal and interest payments on PPP loans are deferred until forgiveness applications are processed by SBA.
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Applying For Ppp Loan Forgiveness
Applications for loan forgiveness are processed by your lender. You need to fill out a PPP loan forgiveness application form and submit that to your lender.
After you submit your application for forgiveness, your lender is required by law to provide you with a response within 60 days.
Note: if you have received two PPP loans, you will need to apply for PPP forgiveness two separate times.
How Can You Apply For Capital Plus Ppp Loan
The application process for Capital Plus PPP Loans is as simple as using your credit card. The company spent months coming up with a simple application process for loans. This is why applicants won’t have to waste hours filling out complicated forms. You can get started within minutes and fill out the entire application in 10 minutes.
This also eliminates the need for hundreds of documents with the application. Basic proof of business and bank statements will help you apply for PPP loans. Here are the steps of the application process:
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Point 3 Other Sources Of Liquidity
The third point to understand is a business needs to take into account other sources of liquidity to the extent these funding sources are not significantly detrimental to the business. If the terms of the liquidity are onerous and would cause harm to the business, either today or down the road, it is fair to assume the business cannot access this funding source and provides another valid data point for obtaining the PPP loan in the first place.
An Important Update On Returning Ppp Loan Funds
Please note that this blog is based on laws effective on May 13, 2020 and may not contain later amendments. Please contact Cray Kaiser for most recent information.
We recently addressed the question, do I need to consider returning my PPP loan funds?. The SBA had provided guidance that if any borrower returns their funds by May 14, the borrower will have been deemed to make their PPP loan certification in good faith. However, today on May 13, the SBA has issued additional guidance regarding the good faith certification, which weve outlined below:
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When Business Owners Should Apply For Forgiveness
Based on the latest guidance, youll have up to 10 months from the end of your covered period to defer payments, and repayments, if applicable, wont begin until Fall 2021. BlueVine will facilitate PPP loan forgiveness for the majority of the PPP loans we originated. If applicable, BlueVine will contact you once its time to apply for forgiveness with ample time to complete your application before your repayment date.
Expenses Deducted Under A Forgiven Ppp Loan
For;N.C. income tax purposes, any expenses paid using the proceeds of the forgiven PPP loan that are otherwise deductible at the federal level are not deductible when calculating N.C. taxable income. Taxpayers;must make a North Carolina addition for;the amount of expenses deducted on the federal return if the expenses were paid with proceeds from a PPP loan, the loan is subsequently forgiven, and the income associated with the PPP loan forgiveness is excluded from federal gross income.
A taxpayer that received a covered loan guaranteed under the PPP and paid or incurred certain otherwise deductible expenses listed in section 1106 of the CARES Act may not deduct those expenses for N.C. income tax purposes;in the taxable year in which the expenses were paid or incurred if, at the end of such taxable year, the taxpayer reasonably expects to receive forgiveness of the covered loan on the basis of the expenses it paid or accrued during the covered period, even if the taxpayer has not submitted an application for forgiveness of the covered loan by the end of such taxable year.
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Second Draw Ppp Loans
If the following statements apply to your business, you are eligible to apply for your second PPP loan in 2021.
- You have used up your first PPP loan
- Your business was operational before February 15, 2020
- Your business is still open and operational
- You have no more than 300 employees
- If your business has multiple locations, you have no more than 300 employees per location
- You can show a 25% or greater reduction in gross revenue
Sba Extends Safe Harbor For Returning Ppp Funds
The U.S. Small Business Administration has extended the safe-harbor period for returning Paycheck Protection Program funds by one week to May 14.
The SBA also explained how its affiliation rules apply to counting the employees of foreign and U.S. affiliates for purposes of the PPPs 500-or-fewer-employee size standard. The new guidance on both topics was added Tuesday as Questions 43 and 44 in Treasurys FAQs related to the PPP.
A May 7 deadline for returning funds was initially provided by the SBA for companies that received PPP funds but later found that they were unable to certify in good faith that their PPP loan was necessary.
Some larger companies have decided to return PPP loans after deciding they possessed sufficient liquidity to manage their businesses without those funds during the pandemic. And Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza announced last week that the SBA in consultation with Treasury plans to review all PPP loans in excess of $2 million as well as other loans where appropriate to ensure they are limited to eligible borrowers.
The guidance issued Tuesday stated that the extension will be promptly implemented through a revision to the SBAs interim final rule providing the safe harbor. The SBA intends to provide additional guidance before May 14 on how it will review borrowers certifications.
Ken Tysiac is the JofAs editorial director.
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Who Is Responsible For A Ppp Borrowers Obligations In The Event Of A Change Of Ownership Of Such Ppp Borrower
In the event of any change of ownership, the PPP borrower remains responsible for performance of all borrower obligations under the PPP loan; the certifications made in connection with the PPP loan application by such borrower, including the certification of economic necessity; and compliance with all other applicable requirements for borrowers under the PPP program. Additionally, the PPP borrower remains responsible for obtaining, preparing, and retaining all required PPP forms and supporting documentation, and providing those forms and supporting documentation to the bank providing the PPP loan to the borrower or to SBA, as applicable, upon request.
I Think Im Disqualified What Else Can I Do
There are lots of other funding options out there! You can check out some of your options below.
A final note: all businesses are unique and itâs possible that this article did not fully cover your situation. If your situation is more complicated, a consultation with a CPA or your lender is highly recommended.