Still Need to Apply for a First Draw PPP Loan?
Businesses that didn’t apply for or secure a loan during the U.S. Small Business Administration’s initial Paycheck Protection Program (PPP) round in 2020 still can apply for a First Draw Loan, even with the program reopening January 11, 2021, for eligible businesses to apply for a Second Draw Loan.
If your business previously received a PPP loan during the initial phase in 2020 and meets certain eligibility requirements, click here to learn how you can apply for an additional PPP loan – which is referred to as Second Draw Loan.
The updated guidance, which be found by clicking here, helps businesses calculate their payroll costs (and the relevant documentation that is required to support each set of calculations) to determine the maximum amount of a First Draw PPP loan.
The guidance describes payroll costs using calendar year 2019 as the reference period for payroll costs used to calculate loan amounts. However, borrowers can use payroll costs from either calendar year 2019 or calendar year 2020 for their First Draw PPP Loan amount calculation.
While the official SBA guidance, which be found by clicking here, answers many questions related to eligibility and how to calculate First Draw PPP Loan amounts, each business has unique needs and special circumstances that may not be directly addressed in the document, as determination most likely will require a detailed review of your financial statements, tax returns and other documentation.
If you need assistance determining if you are eligible for a First Draw PPP loan and/or need help with completing your First Draw PPP loan application, please contact us by clicking here.
Other common questions include:
- I am self-employed and have no employees, how do I calculate my maximum First Draw PPP Loan amount?
- I am self-employed and have employees, how do I calculate my maximum First Draw PPP Loan amount (up to $10 million)?
- I am a self-employed farmer or rancher who reports my income on IRS Form 1040 Schedule F. What documentation must I provide in place of Schedule C and how should my maximum loan amount be determined (up to $10 million)?
- How do partnerships apply for PPP loans, and how is the maximum First Draw PPP Loan amount calculated for partnerships (up to $10 million)? Should partners’ self- employment income be included on the business entity level PPP loan application or on separate PPP loan applications for each partner?
- How is the maximum First Draw PPP Loan amount calculated for S Corporations and C Corporations (up to $10 million)?
- How is the maximum First Draw PPP Loan amount calculated for eligible nonprofits (up to $10 million)?
- I am an LLC owner. Which set of instructions applies to me?
- What other documentation can an applicant provide for the purpose of substantiating payroll costs used to calculate the applied-for First Draw PPP Loan amount?
- I am a corporation or nonprofit and was in operation on February 15, 2020, but was not in operation between February 15, 2019, and June 30, 2019. What reference period should I use to compute my First Draw PPP Loan amount?
- I am self-employed (or a partnership) and was in operation on February 15, 2020, but was not in operation between February 15, 2019, and June 30, 2019. I have filed or will file a Form 1040 Schedule C or Schedule F (or Form 1065) for 2020. What reference period should I be using to compute my First Draw PPP Loan amount?
- In addition to pre-tax employee contributions for health insurance, what are the other pre-tax employee contributions for fringe benefits that may have been excluded from IRS Form 941 Taxable Medicare wages and tips that is part of employee gross pay?
- How should a borrower account for federal taxes when determining its payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven?
- Is there a limit on the dollar amount of First Draw PPP Loans a corporate group can receive?
Ericksen Krentel continues to monitor the ever-changing guidance and requirements for the PPP loan application process to assist you in receiving the maximum benefits allowable. Our team is ready to help create a customized approach for your organization to effectively, and correctly, apply for a PPP loan
If you are interested in applying for a PPP loan and need assistance, please contact us by clicking here.
As questions or concerns arise, we ask that you contact us so we can address them as quickly as possible to ensure we continue to meet your needs. As a reminder, you can always monitor our COVID-19 Updates webpage by clicking here for the latest or monitoring our accounts on LinkedIn, Twitter or Facebook.
About Ericksen Krentel
Ericksen Krentel CPAs and Consultants, founded in New Orleans, Louisiana in 1960 with offices in New Orleans and Mandeville, believes that serving as the clients’ most trusted adviser is grounded in going beyond the numbers.
That includes helping clients achieve their business and personal financial goals by providing innovative and exceptional services in the following areas: audit and assurance services, tax compliance and planning, outsourced CFO services and business valuations for a variety of industries; employee benefit plan audits; fraud and forensic accounting; business planning; IT consulting; loss calculations; and estate planning.
Learn more at www.ericksenkrentel.com.