New PPP Law Extends 8-Week Period and Reduces Percent Payroll Cost Rule

June 4, 2020 6 min read Opinions expressed by Entrepreneur contributors are their own. Congress just passed the Paycheck Protection Flexibility Act of 2020 and improved the Paycheck Protection Program (PPPP) for small-business loans. The bill enhances the PPP by increasing the time small businesses can use funds and receive forgiveness from eight weeks to twenty-four weeks and by reducing the payroll cost rule from 75 percent to 60 percent. The President is expected to sign the bill immediately, and the SBA and Treasury will be tasked to update their regulations, guidance and forgiveness application. 8-Week Forgiveness Period Extended to 24 Weeks Under the original law, small businesses who received a PPP loan had eight weeks to use the funds, and so long as they used the loan proceeds for qualifying purposes, the entire loan could be forgiven. This eight-week timeframe is known as the “covered period” and is the timeframe in which qualified spending […]

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SBA Releases PPP Forgiveness Application and Makes Critical Clarifications and Documentation Requirements

May 18, 2020 10 min read Opinions expressed by Entrepreneur contributors are their own. The SBA released its Paycheck Protection Program (PPP) Loan Forgiveness Application and clarified a few critical definitions and documentation requirements in their instructions. The forgiveness application is completed by the small-business borrower and is submitted to their bank or lender whom they received their PPP loan from. The application consists of 11 lines that when calculated results in the amount of forgiveness a small-business owner will be eligible for. The forgiveness component of PPP is what attracted small-business owners to take out PPP loans in droves, as the program promised forgiveness of amounts loaned so long as the small business used the funds for payroll, business mortgage interest, rent and utilities. For a summary on forgiveness rules please refer to my prior article here. Three-Part Calculation Method The application consists of a three-part calculation to determine […]

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Only $120 Billion Left, Favorable Forgiveness Guidance from SBA and IRS Tax Pitfall

May 11, 2020 7 min read Opinions expressed by Entrepreneur contributors are their own. The SBA Paycheck Protection Program (PPP) is the most significant small-business relief effort in modern history. A key component of the $600 billion-plus (and counting) stimulus rollout is that beneficiaries can have their loans forgiven so long as they use the funds for qualifying expenses, which can include payroll, rent, mortgage interest and utility payments.  The program was extremely popular in round one, and the initial $350 billion in funding was claimed in only 13 days. The SBA began approving an additional $310 billion from the second round on April 27, but as of May 10, only $120 billion in funding remained. (A good chunk of which is owed to dozens of publicly traded companies having returned multi-million-dollar loans.) Related: Should I Return My Small-Business Loan? Only $120 Billion in Round-Two PPP Funding Left Here’s a quick table summary of PPP round-two data as of 5 p.m. EST on […]

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PPP Forgivable Loans Will be Unforgiving for Many

Opinions expressed by Entrepreneur contributors are their own. Many small business owners who have been approved for Paycheck Protection Program loans (“PPP”) are realizing that the loan isn’t as forgivable as they’d hoped. The amount a small business can qualify to have forgiven must primarily be payroll costs. The SBA’s rulemaking has stated that at least 75% of the forgiveness request must be payroll costs but can also contain up to 25% of other approved expenses under the law such as rent, mortgage interest and utilities. That rule seems to be widely understood and so long as small business owners are spending 75% of their PPP funds on payroll this rule won’t frustrate small business owners when it comes time to forgiveness. For details on the PPP loan program in general, please refer to my prior article here.   Unfortunately, there is an additional restriction on loan forgiveness requests which penalizes a small […]

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PPP Is Back With $310 Billion in Additional Funding, But Small-Business Owners Must Act Fast

The new round will go even quicker, so those who missed out must choose the right bank and move immediately. Opinions expressed by Entrepreneur contributors are their own. On Tuesday, the Senate approved an additional $310B of funding for the popular Paycheck Protection Program (PPP) loans for small-business owners, and the House is expected to approve the measure as soon as today.  The original bill passed passed on March 27 and established $349 billion in funding for PPP loans, but that money evaporated in just two weeks. Consequently, many business owners were left unfunded or were unable to find a bank that would even take their application. This additional $310 billion will go much more quickly than the first round, as the pipeline is full of those who applied and missed out initially, as well as others who have since located a bank willing to take their application. The limited funds have unfortunately created some […]

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How to Submit Your SBA PPP Loan Application and Calculate the Loan Amount

Getting a bank to take your app and tabulating the total should be your biggest concerns. April 6, 2020 9 min read Opinions expressed by Entrepreneur contributors are their own. Many small-business owners are completing their Paycheck Protection Program (PPP) loan applications and are running into common questions and roadblocks. The immediate question right now revolves around two issues: First, how do I work with my bank or find a bank to get it submitted? And second, how do I properly calculate the loan amount on the application? If you’re unfamiliar with the PPP loan and how it can be used and forgiven, please refer to my prior article here.  What if my bank still hasn’t launched its PPP application? Most large banks have yet to launch their PPP loan application, and it appears that nearly all of the large banks are planning to do this process entirely online and that initially […]

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New Stimulus Bill Unlocks IRA and 401(k) Dollars for Financially Affected

The $2 trillion relief package provides penalty-free early retirement-account distributions and increases loan limits. March 30, 2020 9 min read Opinions expressed by Entrepreneur contributors are their own. The coronavirus stimulus bill signed into law on March 27 creates new exceptions that allow 401(k) and IRA owners affected by the pandemic to tap into their retirement accounts early. The new law increases the dollar amount you can loan yourself from your own 401(k) from $50,000 to $100,000 and also creates a penalty-free early distribution rule whereby IRA or 401(k) account owners under age 59-and-a-half can take a penalty-free retirement account distribution of up to $100,000. These new rules greatly increase access to retirement account funds, which have become one of the most reliable savings tools. At the end of 2019, Americans held more than $30 trillion dollars in retirement accounts, according to the Investment Company Institute. That’s right, trillions.  These new exceptions are among the many ways business […]

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