Yeah - people are doing lots of stupid things without reading the rules. These are loans - you have to apply for the forgiveness, and you have to show the documentation of what you spent it on, etc. I suspect a lot of people who think they are getting free money right now to do whatever they want are going to be shocked to learn they will need to pay it back. And it's only a 2 year loan, so it's going to have to be paid back pretty quickly.
It is a great deal if your bank will process you before the money runs out. They take 2.5 times your average monthly payroll costs in 2019. (There is a conflict in the statute and the interim-final rules between whether to use a trailing 12 months or just 2019. Our bank required 2019. This is what you can borrow. Rates were supposed to be as much as 4%. It looks like actual rate will be .5 to 1.0% Cheap money. When you receive the funds, you should spend at least 75% on payroll and also use them for rent/mortgage, health insurance costs and utilities. "Payroll costs" is broadly defined and includes wages, salaries, tip, health insurance costs and commissions. It also includes dollars contributed to 401k's or profit sharing plans. You do a second calculation on back end to see what is forgiven. Now, you are 2x instead of 2.5 times, but the categories you can spend the funds on are broader. The next 8 weeks after receipt of funds is critical. Our bankers told us to segregate funds in separate account because although funds are fungible you want to avoid any debate over whether you spent the funds on forgivable obligations. There is a lot of debate regarding how independent contractors are supposed to be treated. Some articles/experts posit that the independent contractors can file their own claim so the business cannot -- despite some apparent language to the contrary. The purpose of the program -- at least the stated purpose -- is to incentive employers to keep employees on the payroll (and maybe with benefits) and to also help employers keep their teams together. Great sounding program. My experience so far is that the Banks are going to favor their most important clients that qualify and push the rest to the back of the line. Each bank appears to interpret the statute/guidance differently to the point of requiring different inputs into the calculations. Worth applying for if you legitimately qualify. And cross your fingers that someone pushes you through.
That was the original plan, but when the SBA released final details last Thursday, they changed it pretty substantially. Bankers are still giving out conflicting information, largely because some of the rules make no sense. Payroll costs, for example, do not include FICA taxes or income tax withholding. So if your employee chooses to have 100% of their paycheck withheld for some dumb reason, your refundable payroll costs are $0. The original summaries and intent of the program are very different from the final rules issued: https://www.sba.gov/document/policy-guidance--ppp-interim-final-rule Check page 10, section G iii, as an example. Unfortunately, the refundability aspect doesn't get activated until June, after you've spent the money and the bank requests the forgiveness through the SBA - so it's going to legitimately be a lot of guesswork for now, and hoping the SBA changes the rules down the line.
Yes, the “interim-final” guidance. I unfortunately had to read a good deal of it as we went through the process. I’m not clear on what part I stated has changed?
It sounds like... EIDL is now limited to 1K per employee up to 10k (the forgivable portion) PPP forgivable is reduced by the amount of EILA (that is forgiven) https://www.inc.com/kevin-j-ryan/small-business-loans-eidl-advance-limitations.html
EIDL... running dry and capped now https://www.nytimes.com/2020/04/09/...ns-coronavirus.html?smtyp=cur&smid=tw-nytimes Owners were supposed to be able to get up to $2 million. Now they’re being told the cap is $15,000 — if they can get any answers at all.
Harris County has to end small business loan program due to overwhelming demand. On the television news one official thought demand might be $30 million. They planned to give $10 million. Demand was $150 million.
My EIDL finally came through, approved for $68k. Now what? What's the latest, this **** changes weekly and there is so much misinformation. I guess the question is: what is forgivable? Still just $1k per employee?
