Level 3

Solved

Do you assists with ppp program questions?

Forum|Forum|6 years ago
April 14, 2020
23 replies
38 views

What are the forgiveness requirements for a sole proprietor without employees who borrows 2.5 times the monthly avereage of the prior year Schedule C line 31?

ProSeries Professional

This topic has been closed for replies.

Best answer by qbteachmt

@qbteachmt wrote:
EIDL is for Rent, debt, etc.
PPP is for Wages.

No, 25% of the PPP can be for rent, mortgage interest, utilities, and interest on debt.

Once again, I prefer to use resources and references:

"PPP vs. EIDL

The Paycheck Protection Program is one of two programs designed to help small businesses during the coronavirus crisis. The other is the Economic Injury Disaster Loan (EIDL) program. While both programs help struggling businesses get back on their feet financially, they have slightly different goals which are suggested by the names of the two programs.

The Paycheck Protection Program business loans account is a new stimulus package designed to help companies retain workers by covering eight weeks of payroll plus some other costs of remaining in business. This loan is 100% forgivable if you follow forgiveness guidelines.

The Economic Injury Disaster Loan program is an established program that helps small businesses overcome the loss of revenue during a declared disaster such as a hurricane, major fire, or, in this case, the COVID-19 pandemic. This loan includes a $10,000 advance (if you apply) that is automatically forgiven.1

You Can Get Both

Many small business owners do not know they can apply for both an EIDL loan and a PPP loan for the same COVID-19 disaster. There are rules, including the key requirement that you can't use money from both loans for the same thing. For example, if you use the proceeds from a PPP loan for payroll, you can't use an EIDL loan for payroll also."

From:

https://www.investopedia.com/your-guide-to-the-paycheck-protection-program-ppp-and-how-to-apply-4802195

And I will add that to the topic I started for Listing all of this, and I invited others to document the resources here, as well:

https://proconnect.intuit.com/community/coronavirus/discussion/starting-the-list-do-your-own-research/01/78407#M211

sjrcpa

Level 15

We don't really know yet. SBA hasn't issued guidance on PPP forgiveness yet.

The more I know the more I don’t know.

T

The-Tax-Lady

Level 8

The PPP loans are for maintaining Payroll, Rent or Mtg. payments & utilities, and when used for those purposes, in the 8 weeks following the distribution of the PPP loan, that amount is subject to the forgiveness, provided you submit the authentication documents required by the lender. It's not guaranteed. If you have no employees, the forgiveness amount, if you were approved, would be limited.

Schedule C, Line 31, Net Profit or Loss is not a number used for calculation on the PPP.

T

TaxGuyBill

@The-Tax-Lady wrote:

Schedule C, Line 31, Net Profit or Loss is not a number used for calculation on the PPP.

Sort of. It is actually for "net earnings from Self-Employment", which Schedule C, Line 31 is the starting point (then it subtracts 1/2 SE tax, and possibly SEHI and employer retirement).

sjrcpa

Level 15

Hot off the press

https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf

The more I know the more I don’t know.

IRonMaN

Level 15

But those rules will change by the end of the week.

Slava Ukraini!

sjrcpa

Level 15

"But those rules will change by the end of the week." if not sooner.

I am particularly not impressed that you must include a 2019 Sch C with your application, even if you have not filed your 2019 tax return yet (which of course is not even due until July 15).

The more I know the more I don’t know.

2

2dogkayakAuthor

Level 3

I am the original poster and this was my first post ever. I wish I could have a do-over.

When I said Schedule C, line 31, I meant that as a starting point, not the final product. To that amount, of course, would be added health insurance, retirement plans and other items allowable.

To re-state the question, once the amount of the loan is established (1/12 of something x 2.5), how much is eligible for forgiveness? The SBA says 1/52 of annual compensation x 8 weeks.

That does not compute to the amount loaned.

That is about 75% or so of the first calculation.

Which amount can be expected to be forgiven?

What kind of documentation would be required to show that the loan proceeds was spent on "owner compensation replacement? A canceled check marked "withdrawal"?

qbteachmt

Level 15

"how much is eligible for forgiveness?"

Did you read the Fact Sheet I provided as a link, or any other resource?

One thing about this crowd is, it helps to do your research and even contribute new info to the Peer Forum, and not just rely on everyone to provide your easy answer while not knowing all the details, and not wanting to know them for your own client or your specific situation.

I provided a link to a topic I just started here today, and there are Lots of links from there, a chain of links, and the specific info needing to be provided is described there, too. I know because I saw it in passing. No one here should need to learn it just to reiterate it here. That's what resources are supposed to provide.

Don't yell at us; we're volunteers

Sign up

Login with SSO

Let's get you signed in

Login with SSO