Mortgage Loan

Forgivable Loan Calculator – Paycheck Protection Program Vs. Employee Retention Tax Credit





See how large of a paycheck protection forgivable loan you are eligible for! Download the Paycheck Protection Program PPP and Employee Retention Tax Credit Calculator here:

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Should I Choose PPP Paycheck Protection Program or Employee Retention Tax Credit?

Below is a summary of both stimulus programs:

What is the Paycheck Protection Program (“PPP”)
– Establishes $350 Billion for the provision of loans to small business
– New type of SBA Section 7(a) loans
– For loans made between February 20, 2020 and June 30, 2020
– Only available to qualifying “small” employers
– Up to 100% of the loan amount is eligible for forgiveness

Who can apply for the Paycheck Protection Program (“PPP”)
-Anyone who meets the SBA’s definition of a “small business concern”
-Has no more than 500 employees per location
-NAICS code begins with 72

Paycheck Protection Loan Details
– Maximum loan amount is lesser of (a) 2.5 times the average monthly payroll (based on 12-month lookback) or (b) $10 million
– Loans will be 100% guaranteed by the SBA
– Availability of credit from other sources does not disqualify eligibility
– No application fees or closing costs
– Nonrecourse; no collateral or personal guarantees imposed
– Maximum interest rate is 4%
– Maximum loan term of 10 years
– First 6 months of payments (principal and interest) are automatically deferred;
deferral can extend up to a year
– Up to 100% of the PPP loan can be forgiven

What is the Maximum Loan From the Paycheck Protection Program
– 2.5 times average total monthly payments of “payroll costs” during the 1-year period
before date the loan is made.

How Does PPP Paycheck Protection Program Loan Forgiveness Work
– Forgiveness equal to amount of qualifying expenses incurred in the first 8-week
period after origination of the PPP loan.
– “Qualifying expenses” include:
Payroll costs (defined earlier)
Rent payments
Mortgage interest (no principal payments)
Utility payments (electricity, gas, water, transportation, telephone, or internet
access)
– Forgiven amounts are not taxable to the small business (i.e., a tax-free grant)
– Forgiven amounts are interest free

PPP Paycheck Protection Loan Example Can Be Seen in The Above Video

PPP Limits on Loan Forgiveness
– Loan forgiveness is reduced proportionately to the reduction in employee headcount during the COVID-19 crisis.
– Loan forgiveness is reduced dollar-for-dollar by decreases in an employee’s compensation greater than 25% from prior quarters

VS.

What is Deferral of employer Social Security
– Employers may defer employer share of Social Security tax deposits (Code section 3111(a)) due for
the period beginning on date of enactment (March 27) through Dec 31, 2020.
– Payment schedule for deferred taxes:
50% due 12/31/2021
50% due 12/31/2022
Deferral option not available if taxpayer has had indebtedness forgiven under the Paycheck Protection Program

What is The Employee Retention Tax Credit
Credit is available to any employer:
(1)that was carrying on a trade or business during calendar year 2020, and
(2)with respect to any calendar quarter:
– had its operations fully or partially suspended due to government orders re COVID-19, or
– had a decline of at least 50% in gross receipts compared to the same quarter in the prior year
– Amount of credit  50% of “qualified wages” with respect to each employee for the quarter
– Maximum wages taken into account per employee = $10,000 (max credit $5,000 per EE)

Facts about Employee Retention Tax Credit
– Credit is taken against employer portion of Social Security taxes (Code section 3111(a))
– Excess credit is treated as an overpayment that shall be refunded
– Companies under common control are considered a single employer
– Pay rate may not be higher than the month immediately prior to taking the credit

Disclaimer
This presentation does not constitute legal or tax advice. It is provided solely for informational and educational
purposes and does not fully address the complexity of the issues or all the steps businesses must take under
applicable laws. You should consult your professional advisers regarding your individual situation. Max Maher
undertakes no obligation to update the information in this presentation, and no representations are made that
the content is error-free.

source

2 comments

  1. Thank you for keeping us up to date on this valuable information. Is it correct that the PP Loan will only be available tomorrow 4/3/2020?

    Reply
  2. My man is on top of this!

    Reply

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