STIMULUS PAYMENTS, PPP LOAN PROCESSING

Stimulus Payments & PPP Loan Processing By Maima Noibi, CPA, MBA

On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law approving a second round of Economic Impact Payments(EIP2) for individuals and Paycheck Protection Program(PPP2) loans to small businesses.

INDIVIDUALS – STIMULUS PAYMENTS AND RECOVERY REBATE CREDIT

Qualifying individuals should have receiver these Economic Impact Payments.
– For individuals making up to $75,000 per year, or if a couple, making up to $150,000 per year, the check will be $600 for taxpayer, spouse and/or each child under age 17 at the end of the tax year.
– For individuals making between $75,000 and $86,900 (couples: $150,000 to $173,900), the check will be between $595 and $5. In this phaseout, the amount of the check decreases by $5 for every $100 of income above $75,000/$150,000, phasing out completely at $87,000/$174,000.
– The amount sent will be based on the amount your adjusted gross income on your 2019 tax return.
– Excludes persons who died on or before January 1, 2020.
– Includes individuals who file jointly with an ITIN, but excludes the person with the ITIN.
– Includes 2019 non-filers who receive benefits from Social Security
Administration, Railroad Retirement Board, and the Department of Veterans Affairs.

THE IRS IS STILL DISBURSING STIMULUS PAYMENTS. IF YOU HAVE NOT
RECEIVED THE SECOND PAYMENT, KEEP AN EYE OUT FOR DIRECT DEPOSIT IN YOUR BANK ACCOUNT, CHECK OR DEBIT CARD IN YOUR MAILBOX. TAXPAYERS THAT DID NOT RECEIVE EITHER ROUND ONE OR ROUND TWO OF THE EIP WILL BE ABLE TO CLAIM THE RECOVERY CREDIT WHEN FILING 2020 TAX RETURNS.

THE ECONOMIC AID TO SMALL BUSINESSES

SBA expects to start accepting application on Friday, January 15, 2021.
The Act not only provides funds and guidelines for a round two of PPP money; it also expands PPP round one in a number of ways. Here are a few of the highlights.

Changes to PPP Round 1 Loans
Existing borrowers with PPP loans can reapply for a loan or request a loan increase as long as they have not received forgiveness. This includes borrowers that returned all or part of their PPP loan or whose loan maximum has increased due to regulations implemented after receipt of their loan.

Businesses that have not been granted forgiveness can spend PPP money and apply for forgiveness on an expanded list of expenses, including
– Software, cloud computing, HR, and accounting
– Property damage
– Supplier costs
– Essential contracts in force prior to loan
– Worker protections, e.g. PPE
– Payroll costs can include group insurance including group life, disability, vision, dental

They can now choose their covered period at any time between 8 and 24 weeks (previously it was 8 OR 24 weeks only). There is also a simplified forgiveness application for loans under $150,000

PPP Second Draw Loans
Additional PPP monies will be available to qualifying businesses, up to loan amounts of $2 million. The business must:
– Have 300 or less employees
– Have used or plan to use the full amount of PPP1
– Can prove a 25 percent decrease in revenue in any quarter of 2020 compared to 2019

Businesses, certain non-profit organizations, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives are eligible.

In round two, borrowers may receive a loan amount of up to 2.5X the average monthly payroll expense in the year prior to the loan or the calendar year. Businesses in the Hotel Accommodations and Food Services industries may receive loans of up to 3.5X average monthly payroll costs.

Organizations not eligible for PPP2 include:
– Businesses not in operation on Feb 15, 2020
– Political organizations and lobbyists
– Entities affiliated with entities in the People’s Republic of China
– Publicly traded companies

The entire program is scheduled to end on March 31, 2021.

MLN Accounting & Tax Service is here to assist your business in the application process. In addition to offering loan consultation, we are now able to process your loan application completely from beginning to end.

Please contact us ASAP if you have any questions.