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Need help with PPP loan


joanmcq

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Yeah, I put in my letter this year that I wasn't going to do these this year, and here I have an email where a client got a $53,000 PPP loan & a $10,000 EIP. 

Just checking that 1) any forgiven loan is not income.  2) expenses paid with loan are allowed. 

Is there anything else I need to be aware of?  I really really really didn't want to deal with these. 

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As long as your client didn't cut employee wage rates too drastically or reduce FTEs it should be pretty easy,

especially if you can cover the $53,000 with payroll only,

if you have to document additional covered expenses then it will be a lot more time consuming.

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She's probably referring to an EIDL Loan, which are not forgiveable. She should have already received an SBA 1601 statement letting her know when the monthly loan payments start and how much. These loans can potentially be a real can of worms because they have very restrictive loan covenants which can really hamstring a business! So you are either going to have to dig in and learn about these loans or refer her to someone else so you don't get blamed if problems occur.

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If it came straight from the SBA (not from an SBA lender, such as a bank) it might've been the EIDL. If EIDL, but she receive only the grant part -- $1,000 per employee up to $10,000 -- it's pretty much like the PPP. If she received the loan part, also, then it's a loan on her balance sheet with interest expense on her P&L. But the SBA has lots and lots of small business loans, so ask for the loan document.

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1 hour ago, Lion EA said:

If it came straight from the SBA (not from an SBA lender, such as a bank) it might've been the EIDL. If EIDL, but she receive only the grant part -- $1,000 per employee up to $10,000 -- it's pretty much like the PPP. If she received the loan part, also, then it's a loan on her balance sheet with interest expense on her P&L. But the SBA has lots and lots of small business loans, so ask for the loan document.

Actually the Covid 19 EIDL Loans were handled thru banks.

If it was a regular Disaster Loan then it was probably thru the SBA.

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