HAVE YOU APPLIED FOR YOUR PPP THIS YEAR? SELF-EMPLOYED, GIG ARTISTS?
DEADLINE MARCH 31
Washington passed the COVID Relief Bill and one of the programs was a second round of the PPP (Payroll Protection Program). Here is what you need to know…
When can I apply?
- As you know, you must apply for the program through a financial lending institution. These can be banks, credit unions and several other lenders like Square.
- If your lender is a large bank, over $1 billion in assets, you can apply through them tomorrow, Jan 15.
- If your lender is smaller, you can apply through them starting Jan 19.
- If you need to know the size of your lender you can go HERE to find out.
- You must apply no later than March 31, 2021.
Who can apply?
- If this is your first PPP loan (first draw) you cannot have received a PPP loan prior to Aug 8, 2020.
- sole proprietors, self-employed, independent contractors, gig performers
- 501c3, 501c6, 501c19, tribal organizations
- housing coops, destination marketing organizations, news organizations
What’s different than the first time?
- You can choose your “covered period” which is any 8-24 weeks once you are approved and receive your loan disbursement.
- You will NOT have your EIDL grant deducted from your loan forgiveness. **
- If you are applying for an amount less than $150k you will file for your loan forgiveness on a simplified form.
SBA will assist eligible borrowers in underserved and disadvantaged communities. At least $15 billion is being set aside for First Draw PPP loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low- or moderate-income neighborhoods.
FIRST DRAW LOANS:
What can I use the money for?
payroll costs, including benefits, mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
How do I get full forgiveness?
if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained;
- The loan proceeds are spent on payroll costs and other eligible expenses;
- At least 60 percent of the proceeds are spent on payroll costs
How do I figure out the loan amount?
Basically you are applying for 2 1/2 months of your payroll expenses…..
A. self-employed and have no employees:
(and your principal place of residence is in the United States, including if you are an independent contractor or operate a sole proprietorship-but not if you are a partner in a partnership)
- Find your 2019 IRS Form 1040 Schedule C line 31 net profit amount (if you have not yet filed a 2019 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less, you are not eligible for a PPP loan.
- Calculate the average monthly net profit amount (divide the amount from Step 1 by 12).
- Multiply the average monthly net profit amount from Step 2 by 2.5.
B. Business/non-profit with employees:
- Compute 2019 payroll costs by adding the following:
a. 2019 gross wages and tips paid to your employees whose principal place of residence is in the United States, which can be computed using 2019 IRS Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips, subtracting any amounts paid to any individual employee in excess of $100,000 and any amounts paid to any employee whose principal place of residence is outside the U.S
b. 2019 employer health insurance contributions (portion of IRS Form 990 Part IX line 9 attributable to health insurance);
c. 2019 employer retirement contributions (IRS Form 990 Part IX line 8); and
d. 2019 employer state and local taxes assessed on employee compensation, primarily state unemployment insurance tax (from state quarterly wage reporting forms).
2. Calculate the average monthly payroll costs (divide the amount from Step 1 by 12).
3. Multiply the average monthly payroll costs from Step 2 by 2.5.
C. Self-Employed with employees:
- Basically you are going to do both of the above. Figure your payroll like “A” and figure your employees payroll like “B”.
- After adding them together, divide by 12 for average monthly payroll costs.
- Multiply that number by 2.5.
If you have questions are have a specific situation we– recommend you discuss this with your accountant. You can also call us at 860-428-7739 or EMAIL us. Our Business Resource Center partner, SBDC can also help you free of charge. Please contact Greg Lewis.