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PPP (Round 2) Information

ChumpChange

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Trying to make an informative post for those that want the information. An old colleague of mine went into helping businesses with PPP forgiveness a while back and now spends all his time figuring the ins and outs. He sent this out last night and publicly put it on his LinkedIn as well so I thought I would share with the masses. It's a good write up on what's going on. I left his website at the bottom but removed his phone contact.

Per the email:

…and here are the rules.

Yesterday the SBA released its first Interim Final Rules (IFR for those in the know) for the Second Draw of PPP. If you don’t want another PPP Loan, please swipe to your next email.

Two IFR documents were released. The first concerned first time PPP Borrowers and the second concerned PPP2 Borrowers. It is important to note that if you did not borrow any PPP funds in 2020, you can be a first-time borrower in 2021. At any rate, the SBA refers to the loans as First Draw loans and Second Draw Loans. Both have commonalities but here is the key similarity: the program for both ends on March 31. Another similarity is that a business owner can’t be in jail. I guess those guys get unemployment from California so they don’t need PPP, but I digress.


First Draw PPP Borrowers:

If you are a first time borrower, you can borrower up to $10 million

Up to 500 employees

Self-employed, Schedule C borrowers with no employees can estimate their Schedule C for 2020 to determine their PPP Loan. Maximum allowed is $20,833.

5 Year maturity

Uses include:

Covered operations expenditures – basically software needed to run your company; there are specifics but I don’t want to get into the weeds here.

Personal protective equipment costs, and expenditures for property improvements to mitigate the spread of covid

Loans of $150,000 or less will have a one page forgiveness application when borrowers seek forgiveness

SBA reserves the right to audit all loans. PLEASE NOTE: The requirement of economic uncertainty AND the necessity of the loan is mentioned numerous times throughout the document so any borrower would be wise to take it seriously.



Second Draw PPP Borrowers:

Essentially the same as First Draw Loans except:

Maximum of 300 employees

$2 million maximum amount

Must have spent the full amount of the first draw on eligible expenses – Lamborghini buyers need not apply.

25% revenue reduction when comparing quarter to quarter must be shown OR you can show an annual reduction of 25% when comparing 2019 to 2020

Your PPP first draw is NOT included as income/gross receipts for revenue measurement purposes when applying for the Second Draw

NAICS code 72 businesses are eligible for 3.5x the monthly payroll – that is the restaurant and hotel business, an industry that desperately needs these funds.


Documentation – Pay Attention!

For loans with an amount greater than $150,000, the applicant must also submit documentation adequate to establish that the applicant experienced a revenue reduction of 25% or greater in 2020 relative to 2019 – nothing new there, but…

For loans with a principal amount of $150,000 or less, such documentation is not required at the time the borrower submits its application for a loan, but must be submitted on or before the date the borrower applies for loan forgiveness.

There is a new form: SBA Form 2483-SD (Second Draw)

That’s it. Overall, not too many surprises and the focus really seems to be on the small business owner. It is expected that the SBA will open its lending window next week, but it is very unlikely that banks will be ready that quickly. However, it won’t be long.


Contact me if you need assistance; I’m happy to help.


Thanks,

Adam Russell
www.ppploanservice.com
 

DaBank

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Self-employed, Schedule C borrowers with no employees can estimate their Schedule C for 2020 to determine their PPP Loan. Maximum allowed is $20,833.

So if a self employed borrower has not applied or received a PPP loan yet they can apply now?
What if you are self employed (20 years) and in 2020 you where not open the full year because of covid and obviously you still had your fixed overhead of utilities,insurance,maintenance,etc.
Now your 2020 Schedule C will list a lost for the year, you will be able to get a forgivable PPP loan up to $20,883?
 

Done-it-again

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Just found this out today as well. Also the bank you used for the first one can reuse the same paperwork for the 2nd round.

There is also a tax break if you can prove your business was hit due to covid and show 50% decline in the following quarters, but then no PPP. You need to find what works best for you.

SBA can start receiving paper work on Monday.
 

Angler

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That's good news for a lot of businesses.
 

wash11

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Question for people that went through the process on round one, has anyone had their loans forgiven yet?
 

pkbullet

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Question for people that went through the process on round one, has anyone had their loans forgiven yet?
We are just competing the forms now, appears that we will qualify for 100% forgiveness. We had a large number of sales personnel not come back from state ordered furlough even though we paid them during it. It’s requires additional documentation for them not to count against retention.
 

Done-it-again

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Question for people that went through the process on round one, has anyone had their loans forgiven yet?
It was passed in the last stimulus bill that round one that federally the money is not taxed as income. But each states has there own right to tax it as so. Not sure about AZ but CA hasn’t conformed yet and it still unknown.
 

Angler

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Looks like I'll be around 24.5% decline from the previous year..
 

HB2Havasu

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If you qualify I can't see a reason not to do it. Eventually taxes will be raised as a result of the spending, might as well have benefited from it.
They are not borrowing for stimulus. They are printing cash and flooding the marketplace with Monopoly Money. I’m a lot more worried about Hyper Inflation than the tax implications.
 

pkbullet

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They are not borrowing for stimulus. They are printing cash and flooding the marketplace with Monopoly Money. I’m a lot more worried about Hyper Inflation than the tax implications.
I am far from an expert in this area. However I believe the fed "prints" electronic money that is deposited in banks that is used to purchase existing treasury's. This provides income from interest to treasury and allows the sale of new treasury's creating new debt. I don't disagree that inflation is the logical result, unless you look at what has not happened in Japan. I believe that there debt is 200% of GDP. There is some data that suggests the liquidity of the business sector has prevented the inflation. I am buying dirt and the market as my hedge against inflation. Cash is probably not a great place to be. We do not qualify for round 2, but if I did I would take it in a heart beat.
 

HB2Havasu

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I am far from an expert in this area. However I believe the fed "prints" electronic money that is deposited in banks that is used to purchase existing treasury's. This provides income from interest to treasury and allows the sale of new treasury's creating new debt. I don't disagree that inflation is the logical result, unless you look at what has not happened in Japan. I believe that there debt is 200% of GDP. There is some data that suggests the liquidity of the business sector has prevented the inflation. I am buying dirt and the market as my hedge against inflation. Cash is probably not a great place to be. We do not qualify for round 2, but if I did I would take it in a heart beat.
Hard Equities are probably a good thing to have in your pocket right now. I’m old enough to remember in High School the Double Digit Inflation during the Carter Administration. Wages cannot keep up. My Single Mom really struggled to put food on the table most weeks. Not having enough money to eat is probably one of the most terrifying times of my life!
 

HTMike

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My first PPP loans were forgiven entirely and Im get a second hit on all of them.
 

MillerTime

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Question for people that went through the process on round one, has anyone had their loans forgiven yet?
I just received an email this morning saying my ppp loan was forgiven and payed by the sba.
I dont qualify for the 2nd round though. 2020 was our second year in business, and we had 40% sales growth compared to our first year (2019), but our profits were close to the same unfortunately. The plus side is we probably won't have to worry about taxes!

Sent from my SM-N960U using Tapatalk
 

lakemadness

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Anyone have their second draw PPP loan request approved yet?

Ours is in and being reviewed....
 

The Prisoner

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My bank told me second round is online only. I just downloaded the forms. i can see this is gonna be a pain in the ass as BOf A has no branches here
 

hallett21

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Anyone do the CA grant? I figured what the hell it’s free money. Haven’t heard anything though


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Done-it-again

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Just submitted ours yesterday.....Will see.

FYI....Not getting a new boat....
 

Done-it-again

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Yes, I know of a couple
It was a lot more work this time around and needed our accountants to really help....

Was told that there could be a couple of additional questions/information needed when it goes under review as well
 

paradise

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It was a lot more work this time around and needed our accountants to really help....

Was told that there could be a couple of additional questions/information needed when it goes under review as well
Which is great. Hopefully it'll stop most of the fraud this time around. It was way too 'easy' round 1.
 
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