UPDATES ON THE ORIGINAL PROGRAMS

Updated on 1/11/21

PPP 1 Re-opening (most will not qualify)

There are a couple of reasons why a borrower would qualify to reapply for PPP 1. However, even if you meet one of the qualifications below you cannot reapply if you have already had PPP 1 forgiven.

If you received a PPP 1 loan and the amount received was less than what you should have qualified for. There was a lot of confusion with lenders and the rules to the program changed multiple times. (I have had clients who applied with two lenders and each lender approved the application for a different amount. It’s a universal formula so the approval amount should be the same regardless of the lender.) If this happened to you be sure to reapply by 3/31/21. The loan amount would be the difference between what you received initially and what you should have received.

2. If you file a schedule C, as the owner you are not an employee of the company so you cannot be on formal payroll. Instead, you take draws. If you also have W2 employees you could have applied for a loan based on payroll AND a loan based on schedule C 2019 net income. If you only applied for one loan you can reapply for the second loan.

There are other reasons but these are the most common with my clients.

A NOTE ON PPP 1 LOAN PAYMENTS

Per the SBA, PPP 1 loan payments begin 10 months after the end of your covered period (either 8-weeks or 24-weeks) for amounts that have not been forgiven. If you receive a notice from your bank that loan payments will begin before that time be sure to contact your bank and make sure they are aware of the error. I have seen this happen with several different lenders so be sure to speak up if it happens to you.

PPP 1 Forgiveness

As of 1/10/2021, most lenders (if not all) are not accepting forgiveness applications at this time. They are updating their systems with the new forgiveness application for loans $150,000 and below and updating their systems with the new guidance provided by Congress.

If your lender says they are not accepting or that they are accepting but not processing at this time don’t be alarmed. As well, many lenders never began accepting forgiveness applications as they were waiting on Congress to provide further guidance. And I am sure they are glad they waited!

PPP 1 Forgiveness & EIDL Grant/Advance

This information only applies to you if you received PPP 1 AND an EIDL Grant/Advance.

If you received both and have already applied for forgiveness then the SBA reduced down your forgiveness amount by the amount of your EIDL grant/advance. In the new guidance from Congress, it was determined that the amount of the EIDL grant/advance would not affect the amount of PPP forgiveness.

It’s not clear yet how this will be handled but the amount of your forgiveness will be adjusted to the amount prior to subtracting the EIDL grant/advance. This is one of the areas that we will have to be patient and wait for further guidance.

EIDL GRANT/ADVANCE

There is a lot of speculation on what is happening with this program going forward. There isn’t clear guidance yet so I will not add to the speculation. When further guidance is available I will add the update here.

Note: The EIDL Grant is sometimes referred to as an advance. It was the amount that was based on the number of employees. $1000 per employee up to $10,000. It was automatically deposited into your bank account after applying for the EIDL Loan. However, funds did run out so if you applied late in the game you might not have received the advance.

EIDL LOAN

EIDL Loans are still available for up to $150,000. Loan information and the application portal are located on the SBA website.

NOTE:

These are loans that must be paid back. There is NO chance for forgiveness.
The loan is administered by the SBA and funds come from the SBA (not your bank).
If you have already received an EIDL Loan you may not apply for another one.
Loans are separate from the EIDL grant/advance program.
Check your loan paperwork to determine the date loan payments start.

If you found this article helpful leave us a comment. We enjoy hearing from you.

FOR DETAILS ON PPP ROUND 2 CLICK HERE

~ Brandon & Christi are successful business owners who enjoy traveling and making a mess in the kitchen with their two daughters. They reside in the Dallas, TX suburbs and work with businesses throughout the U.S.

The article is for informational purposes only and should not be construed as business, accounting, tax, or legal advice. Details are from the latest legislation as of the date of this post. Details are subject to change without notice. It is wise to seek financial counsel before proceeding with any loan application.