If your firm received a Paycheck Protection Program loan, do you know exactly how to have your loan forgiven?
If you’ve already received a loan, are you eligible to apply for a second one?
How should the proceeds be reported in your tax filings?
More than $500 billion in loans have been distributed since the Paycheck Protection Program was launched in March 2020. Close to half of all law firms – and three-quarters of solo practitioners – have received a PPP loan.
If you’re one of those firms, you’ll find answers – and online links – to all questions about the PPP in this post. Included is a U.S. Chamber of Commerce list of the 23 Most Frequently Asked Questions about the PPP.
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SBA And Treasury Announce PPP Re-Opening
The U.S. Small Business Administration (SBA) and the Treasury Department re-opened the Paycheck Protection Program (PPP) for new borrowers and certain existing PPP borrowers on January 11, 2021.
Read the SBA press release here.
Key PPP updates include:
- PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
- The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, among other types of organizations;
- The PPP provides greater flexibility for seasonal employees;
- Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
- Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
- Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
- Has no more than 300 employees; and
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
23 Most Frequently Asked PPP Questions
Click here for a “23 FAQs About PPP” article on the US Chamber of Commerce website. The questions appear below; this link takes you to the answers. Click here for the Chamber’s Guide on PPP Loan Forgiveness.
- How does the Paycheck Protection Program (PPP) work?
- How do I apply for a first or second PPP loan?
- What’s different about the second-draw PPP loans?
- How do I calculate the maximum amount for my PPP loan?
- What are the loan terms?
- Do I qualify for a first or second PPP loan?
- How can I get my PPP loan forgiven?
- What can I do to maximize PPP loan forgiveness?
- Do businesses with smaller PPP loans have to do less paperwork?
- Can I use an EIDL grant and a PPP loan?
- Is my business allowed to use the Employee Retention Tax Credit and PPP?
- Will the IRS be taxing the PPP loans or expenses paid for with PPP loans?
- I applied for a PPP loan. How can I find out about my current status?
- My bank has not processed my PPP application yet. Can I apply through another lender as well?
- Will my PPP loan be audited?
- Should I pay employees with PPP funds even if my business is closed?
- For independent contractors and sole proprietors, how do you document the cash you draw from the PPP loan to have it forgiven?
- If you have a workforce reduction, are you allowed to increase owner or other employee pay to meet the 60% threshold PPP requires?
- If I normally pay vacation pay and/or a bonus, can I do it now under the PPP program instead of later in the year like I normally would?
- Is it necessary to open a separate banking account to utilize PPP funds?
- Can I add new employees during the PPP loan forgiveness period, and can their payroll be included for forgiveness?
- What should an employer who has received a PPP loan do about an employee who is receiving unemployment insurance that exceeds their normal wages and they don’t want to come back?
- As a small business owner, I’m confused about how we pay for rent, utilities, etc., when my PPP loan is 60% for employee payroll. The balance remaining based on the formula will not cover rent. What can I do?
Sources: US Chamber of Commerce and SBA
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