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Started By
Message
re: PPP 2nd Round Update 1/14/21
Posted on 1/12/21 at 2:06 pm to VABuckeye
Posted on 1/12/21 at 2:06 pm to VABuckeye
I cant tell you how much I appreciate everything, you have been a wealth of Knowledge. Spock forwarded the email to me, and not that I am doubting what you are saying but can you direct me to where it states that the HHS stimulus and the EIDL loan are not to be included in Gross receipts? it could make a difference in our situation
1
Posted on 1/12/21 at 3:17 pm to Tigerpaw123
Thanks for the kind words.
I interpret gross receipts as revenue only which seems to be backed by this language.
I can tell you that the EIDL loan and grants are most certainly not part of gross receipts.
Unfortunately I have been unable to find information about the HHS payment (provider relief fund) payment you received. I did see that the IRS is classifying it as income but I haven't found anything regarding calculations for a 2nd PPP loan and whether it counts as income or not for that purpose.
My heart tells me no but this is the federal government so who knows for sure. See above quote for the gross receipts information straight from the SBA.
I interpret gross receipts as revenue only which seems to be backed by this language.
quote:
Gross receipts, for this purpose, includes all revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. Generally, receipts are considered “total income” (or in the case of a sole proprietorship, independent contractor, or self-employed individual “gross income”) plus “cost of goods sold,” and excludes net capital gains or losses as these terms are defined and reported on Internal Revenue Service (IRS) tax return forms.
I can tell you that the EIDL loan and grants are most certainly not part of gross receipts.
Unfortunately I have been unable to find information about the HHS payment (provider relief fund) payment you received. I did see that the IRS is classifying it as income but I haven't found anything regarding calculations for a 2nd PPP loan and whether it counts as income or not for that purpose.
My heart tells me no but this is the federal government so who knows for sure. See above quote for the gross receipts information straight from the SBA.
This post was edited on 1/12/21 at 3:18 pm
Posted on 1/12/21 at 4:44 pm to VABuckeye
Thanks again, so if EIDL loan and EIDL advance (1K/employee up to 10K) does not count in gross receipts ...we are eligible by a decent margin take away HHS stimulus and it aint even funny
Posted on 1/12/21 at 5:06 pm to VABuckeye
VABuckeye—
Are you sure on the part about not needing to show a loss if you’re a first time borrower?
Started LLC 10/19 but no real revenue until 9/20.
Thanks for the help. Hope all is well.
Are you sure on the part about not needing to show a loss if you’re a first time borrower?
Started LLC 10/19 but no real revenue until 9/20.
Thanks for the help. Hope all is well.
Posted on 1/12/21 at 5:12 pm to JoseVargasTX
Yes, I am sure that a first time PPP borrower does not need to show a loss to a matching quarter 2019 to 2020.
Hope all is good with you. We need to catch up one of these days.
Hope all is good with you. We need to catch up one of these days.
Posted on 1/12/21 at 5:48 pm to VABuckeye
I’d like to ask a couple questions regarding forgiveness before moving onto the second round of PPP.
S Corp with less than ten employees. First PPP loan was around 75k.
Should I apply for forgiveness now? I was given the advice in November to wait until after the end of 2020 to apply.
Do we need to have loan forgiven to qualify for second round?
S Corp with less than ten employees. First PPP loan was around 75k.
Should I apply for forgiveness now? I was given the advice in November to wait until after the end of 2020 to apply.
Do we need to have loan forgiven to qualify for second round?
Posted on 1/12/21 at 6:13 pm to Sheepdog1833
Apply for forgiveness now. There is no good reason to wait.
ETA - if you qualify for round 2, speak to your banker. I say apply for forgiveness and send in round 2 application.
ETA - if you qualify for round 2, speak to your banker. I say apply for forgiveness and send in round 2 application.
This post was edited on 1/12/21 at 6:15 pm
Posted on 1/12/21 at 7:02 pm to Sheepdog1833
My understanding is that you need the first round of PPP completely resolved before applying for a second round.
I don't know why you were told to wait to get forgiveness. Makes no sense.
I don't know why you were told to wait to get forgiveness. Makes no sense.
Posted on 1/12/21 at 7:29 pm to VABuckeye
I’ll have to pull up email but had something to do with the way it could be taxed before the newest stimulus package was approved.
How quickly did y’all get a resolution on forgiveness?
How quickly did y’all get a resolution on forgiveness?
Posted on 1/12/21 at 10:26 pm to Sheepdog1833
Our loan was forgiven in late November and legislation was already in place that it wasn’t taxable.
Posted on 1/12/21 at 10:46 pm to VABuckeye
I believe as long as you attest that your proceeds from the first PPP loan are, or will be, exhausted before you apply for the 2nd, your good. It does not have to be forgiven to apply for 2nd
Posted on 1/13/21 at 8:21 am to rlp
quote:
I believe as long as you attest that your proceeds from the first PPP loan are, or will be, exhausted before you apply for the 2nd, your good. It does not have to be forgiven to apply for 2nd
This is how I read it as well; however, it has been a few days since I read through the application. You essentially have to attest, under penalty of fraud, that you used all of the proceeds from the first PPP. With that said, there is absolutely no reason to hold onto the loan and you are better off getting it forgiven sooner than later.
Posted on 1/13/21 at 8:25 am to VABuckeye
quote:A couple of questions:
My understanding is that you need the first round of PPP completely resolved before applying for a second round.
I don't know why you were told to wait to get forgiveness. Makes no sense.
1. What documentation, other than the application form and financial statements for the quarter in which receipts were 25% lower than 2019, did you submit with your application for Round #2 ? I want to get my staff going on this but don't know what will be required.
2. When did your bank start accepting Round #1 forgiveness applications ? My bank has been completely silent on this.
3. When will "normal" banks be allowed to accept Round #2 applications ? Zero info from my bank (which is supposedly an SBA "preferred Lender").
4. After Round #1 was handled so poorly by my bank (lousy communications), I opened a sizable account with a local credit union that poster here recommended - so I'd have a better option if a similar program were to be created. When Round #2 info came out last Friday (Jan. 7th ?) I called the credit union and was told that the SBA strongly recommended applying for Round #2 through the same lender used in Round #1 (because they are going to need loan data for Round #1). Any truth to this ?
Posted on 1/13/21 at 8:28 am to VABuckeye
I am not a tax guy, so take my comments with a grain of salt. I also know nothing about the HHS.
When you look at a tax return, there are typically 2 lines that you would want to pay attention to, the "gross receipts" and "other income".
The figure you, or your tax professional, would input into the Gross Receipts is the income derived during the normal course of business. I.e., the sales and/or services from your business.
The Other Income is where all of the other revenue/cash inflow "MAY" go. This is typically items like interest income, gains on sale of fixed assets (if that's not part of your business).
The proceeds from the EIDL would not touch your income statement. In accounting terms, you would increase your cash and create a liability for the debt. There was a debate about how to handle any forgiveness for the PPP (and any of the EIDL that may have been forgiven). The discussion was whether it would be a reduction of expenses or "Other Income". At no point would this be considered a gross receipt, because it is not derived from the normal course of business.
Again, I do not know anything about the HHS program, but since it is not part of your normal course of business; in my opinion, any portion that would be forgiven (if IRS did not clarify) would either be a contra-expense or Other Income.
When you look at a tax return, there are typically 2 lines that you would want to pay attention to, the "gross receipts" and "other income".
The figure you, or your tax professional, would input into the Gross Receipts is the income derived during the normal course of business. I.e., the sales and/or services from your business.
The Other Income is where all of the other revenue/cash inflow "MAY" go. This is typically items like interest income, gains on sale of fixed assets (if that's not part of your business).
The proceeds from the EIDL would not touch your income statement. In accounting terms, you would increase your cash and create a liability for the debt. There was a debate about how to handle any forgiveness for the PPP (and any of the EIDL that may have been forgiven). The discussion was whether it would be a reduction of expenses or "Other Income". At no point would this be considered a gross receipt, because it is not derived from the normal course of business.
Again, I do not know anything about the HHS program, but since it is not part of your normal course of business; in my opinion, any portion that would be forgiven (if IRS did not clarify) would either be a contra-expense or Other Income.
Posted on 1/13/21 at 9:08 am to Weekend Warrior79
quote:
With that said, there is absolutely no reason to hold onto the loan and you are better off getting it forgiven sooner than later.
My banker has told me over and over again not to worry about applying for forgiveness as he is certain all loans under $150k will be forgiven without paperwork. Though I haven’t seen that pass yet. Should I just apply for forgiveness?
Posted on 1/13/21 at 9:20 am to LSUlove
If you have not been keeping a log with all of the information (mainly for the hours & wages per payroll), I would wait. But, if I already have everything together, I would go ahead and submit the application.
Posted on 1/13/21 at 9:36 am to JohnWicksDawg
quote:
I called the credit union and was told that the SBA strongly recommended applying for Round #2 through the same lender used in Round #1 (because they are going to need loan data for Round #1). Any truth to this ?
That is correct. If you use the same lender you do not have to submit substantiating data (payroll info, etc) for the loan amount as they will use the information from the 1st application. For most, this is better since you would qualify for a higher loan amount than you would if your payroll is lower in 2020 than it was in 2019.
Posted on 1/13/21 at 9:36 am to Weekend Warrior79
We opened a separate account for the PPP money and disbursed payroll, health insurance, etc from that account so accounting for the forginveness would be simple.
I agree with what you posted about income and other income.
I agree with what you posted about income and other income.
Posted on 1/13/21 at 10:51 am to VABuckeye
quote:
We opened a separate account for the PPP money and disbursed payroll, health insurance, etc from that account so accounting for the forgiveness would be simple.
I did the exact same. Just haven't applied for forgiveness.
I did see this link on the PT regarding forgiveness though.
100B in PPP Loans forgiven
Posted on 1/14/21 at 9:46 am to LSUlove
Bump for today's update to OP.
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