The CARES Act, SBA, and US Treasury have combined over the past three weeks to generate more questions than we’ve had to field in the last three years combined! Goodness! We’ll attempt to punch through these quickly for you.
We are starting to hear that clients are receiving stimulus checks. If you haven’t received yours yet, you can check the status, confirm your payment type, and enter your bank information using this link. Please note that this website is overloaded, and may either error out, or take a long time to load. Try accessing late at night or early in the morning for best results:
Yikes – it’s April 15th and I haven’t filed!
No worries! The IRS has extended the time to file and the time to pay until July 15. This applies to your 1st Quarter Estimated tax payment too. This is the lowest stress April 15th we’ve ever had!
PPP Loans are being funded
We are seeing some clients receive their PPP loan proceeds. If you haven’t received yours yet, don’t fret, it’ll be on its way soon – likely this week or next. We are going to be providing some guidance in the next day or two about how to spend those PPP funds to make sure that your loan is forgiven, and you aren’t required to repay it.
SBA Economic Injury Loans
We are hearing from clients that they are starting to receive notice that they are qualified for an SBA Economic Injury Loan. This comes to you after you go through the streamlined process at:
If you haven’t already applied, you should consider doing so. We are hearing that the loan amounts are as much as 40% of a company’s gross profit from 2019 and the terms are 3.75%, no payments for 12 months, and a 30-year amortization after that. Great opportunity to put capital to work! Please note that this website has been getting hammered the last couple days too – you may want to try to access it early in the morning or late at night.
The Treasury issued another Interim Final Rule – this one addresses how independent contractors qualify for the PPP loan.
There is a LOT to unpack there, but it can be summarized like this:
- People who file a Schedule C on their individual tax return, and show profit, are eligible for the PPP loan,
- The loan amount depends on if you have employees or not,
- If you don’t have employees, the loan amount is 20.83% of your 2019 Schedule C net income,
- If you do have employees, it’s a bit more complicated – contact us at [email protected]
Unfortunately, the entire Paycheck Protection Program and CARES Act turns a blind eye to the many, many small business owners who operate through entities (LLC’s/Inc’s/PA’s) taxed as S-Corporations, have low or no payroll, and take most of their income as distributions from the S-Corporation. While this is a massive self-employment tax-saving strategy year-in and year-out, it is unproductive for the PPP loan, which is tremendously disappointing. For those of you this applies to, we are still on the lookout for other strategies that will benefit you during this tough time.
Thanks for allowing us to serve you.
Ben and the Tembo Team