re: Those who received PPP funding

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(1) Pay rent forward

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(2) Pay bonuses to employees

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I would think that neither of those things would be allowable uses of the PPP funds.

I'm pretty certain #2 is not allowable.

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I would think that neither of those things would be allowable uses of the PPP funds.

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I'm pretty certain #2 is not allowable.

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Can either of you cite a source for that? I haven't seen anything other than the $100k annual cap that restricts compensation.

I know there was also some uncertainty re: whether or not state and federal taxes would be forgivable. You have any intel on that? Thanks for all the help.

Re: State and Federal Taxes. We seem to be ok on that. From Forbes.

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#6: What are we doing about federal income tax withholding and payroll taxes?

Here we go again. The CARES Act states that payroll costs do not include “...taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code during the covered period.” These taxes include federal income tax withholding on employee wages as well as the employer’s and employees’ share of Social Security and Medicare taxes.

This exclusion caused mass confusion during the application process, with some banks lending based on an employer’s NET 2019 payroll, with others lending based on GROSS payroll PLUS the employer’s share of payroll taxes. It’s hard to blame the banks, however, as the paragraph made little sense when determining loan proceeds; after all, why would we reduce 2019 payroll costs for withholding and payroll taxes incurred in April, May, and June of 2020?

Eventually, the SBA reached the logical conclusion that in determining loan proceeds, this paragraph is to be ignored. In other words, the computation is based on gross payroll, unreduced by federal income tax withholding and the employees’ share of payroll taxes, and not increased by the employer’s share of payroll taxes. Fair enough.

But what now? Payroll costs for the covered 8-week period are defined in the same manner as payroll costs for the purposes of computing proceeds — does this mean that the intention of Congress was that while amounts could be loaned based on 2019 gross payroll, only net payroll during the covered period should be forgiven, thereby preventing the government from effectively paying itself the required payroll taxes for eight weeks?

That may have been the intent, but based on the SBA FAQ as it stands today, in computing forgiveness, payroll costs will also be gross. A footnote to the FAQ provides:

The definition of “payroll costs” excludes “taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period,” defined as February 15, 2020, to June 30, 2020. As described above, the SBA interprets this statutory exclusion to mean that payroll costs are calculated on a gross basis, without subtracting federal taxes that are imposed on the employee or withheld from employee wages...Further, because the reference period for determining a borrower’s maximum loan amount will largely or entirely precede the period from February 15, 2020, to June 30, 2020, and the period during which borrowers will be subject to the restrictions on allowable uses of the loans may extend beyond that period, for purposes of the determination of allowable uses of loans and the amount of loan forgiveness, this statutory exclusion will apply with respect to such taxes imposed or withheld at any time, not only during such period.

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I'm afraid that doesn't quite answer the entirety of my question. Let me explain my question more effectively.

Re: Gross vs. Net, I'd been (and my banker had been and my CPA had need) operating under the assumption that Gross Payroll is what we should go off of, and that seems to be answered affirmatively in what you provided.

However, in addition to Gross Payroll expense (which is before all EMPLOYEE deductions / tax withholdings), I also have my EMPLOYER share of state and federal taxes. Those amounts are expenses over and beyond Gross Payroll. Are those expenses also forgivable?

Just signed my closing documents..should be funded by tomorrow morning

Based on that fact sheet you linked, it appears they are forgivable (see second page).

However, someone posted a link to some dude ranting on YouTube about this program yesterday (I know, I know, but he actually appeared to know what he was talking about) that said the government had decided those expenses were not forgivable.

Which has caused me to ask the question. It appears to be hearsay from what I can tell at this particular point in time.

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As with most of the program I don't see a definitive answer but that accelerated payments line could be interpreted a couple of way.

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Agree it is vague. Nothing I’ve seen in the bank forgiveness calculations differentiates between regularly salary and bonus. Of course those are subject to change with guidance from SBA.

So, if funds hit on Wednesday the 10th we should be making payroll from wednesday-wednesday for the next 8 weeks?