First stimulus payments expected to go out week of April 13

The Treasury Department and IRS officials have told the House Ways and Means Committee that the initial wave of payments will go out the week of April 13. The payments will automatically be deposited into the same bank account reflected on the 2019 or 2018 return filed. In the coming weeks, the Treasury plans to develop a web-based portal that will allow individuals who have not recently submitted banking information to the IRS to do so, enabling them to receive payments immediately as opposed to waiting for a check to arrive in the mail.  So, if you want direct deposit, keep checking the IRS.GOV website.

Economic Injury Disaster Loans

The SBA is making available disaster loans of up to $2 million to pay for fixed debts, payroll, accounts payable, and other bills.  The interest rate is fixed at 3.75% for small businesses and 2.75% for non-profits. These loans can be paid over a period of up to 30 years.

Additionally, due to COVID-19, the SBA is providing advances of up to $10,000 on EIDLs for businesses experiencing a temporary loss of revenue. Funds are available within three days after applying, and the loan advance does not have to be repaid.

Due to COVID-19, the SBA is providing advances of up to $10,000 on EIDLs for businesses experiencing a temporary loss of revenue. Funds are available within three days after applying, and the loan advance does not have to be repaid.

Small business owners can apply for an EIDL and advance here: Economic Injury Loan.  This is a very simple process to get the initial process started for the SBA to grant an economic injury loan.  The SBA is making an advance of $10,000 which is supposed to be paid in 3 banking days of the application. Make sure you check the box that states you would like a $10,000 advance on the last screen, have your banking information available, routing number and account number.

Paycheck Protection Program-Forgiveness Loan

We have been discussing this program for the last couple of weeks, See complete description below.

As of this writing 4/2/2020, the SBA and some major banks have not agreed upon certain terms of the lenders responsibilities with respect to offering these loans.  Although, the SBA announced that applications would start tomorrow, 4/3/2020, we still don’t know if they will be processed or await further guidance and agreement with the banks.

As of 4/2/2020, the SBA is still finalizing its rules and guidance.  This guidance has shifted numerous times over the past few days.

Below are two recent articles that outline the challenges ALL banks are facing on properly rolling out this program.  It needs to be done correctly to avoid disaster. Please take the time to read both articles and I think you will have a better understanding around the problems rolling this out.


Reuters 4-1-2020 Article


Politico 4-2-2020 Article

New Paycheck Protection Program-Forgiveness Loan

The Paycheck Protection Program (PPP) is an expansion of the existing 7(a) loan program, authorized by the recently passed Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Who is eligible? You are covered if your business was in operation as of February 15, 2020, and you had either (a) employees for whom you paid salaries and payroll taxes or (b) 1099-MISC independent contractors. Small businesses that employ 500 or fewer employees, including sole proprietors, independent contractors, certain non-profits, veterans’ organizations, tribal businesses, and self-employed workers, are all eligible for PPP relief.

“Self-employed” workers are who you would think they are, the sole proprietors who file Schedule C with their Form 1040. IRC Section 1402 identifies them as those who regularly carry on a trade or business within the meaning of tax code Section 1402.

How will my Loan be calculated? Small businesses can borrow 250 percent of their average monthly payroll expenses during the one-year period before the loan is taken, up to $10 million.

For example, if your monthly payroll average is $100,000, you can borrow $250,000 ($100,000 x 250 percent).  At $1 million payroll average per month, you can borrow $2.5 million.

The law defines “payroll costs” very broadly as:

  • employee salaries, wages, commissions, or “similar compensation,” up to a per-worker ceiling of $100,000 per year;
  • cash tips or the equivalent;
  • payment for vacations and parental, family, medical, or sick leave;
  • allowance for dismissal or separation;
  • payment for group health benefits, including insurance premiums;
  • payment of any retirement benefit; or
  • state or local tax assessed on employee compensation.


What’s specifically not included in payroll costs:

  • Annual compensation over $100,000 to any individual employee
  • Compensation for employees who live outside the U.S.
  • Sick leave or family leave wages for which a credit is already provided by the Families First Coronavirus Response Act (P.L. 116-127)


How Much of the Loan Is Forgiven? Principal amounts used for payroll, mortgage, rent, and utility payments during an eight-week period (starting with the loan origination date) between February 15, 2020, and June 30, 2020, will be forgiven.

If the full principal is forgiven, you are not liable for the interest accrued over that eight-week period—and, as an added bonus, the canceled amounts are not considered taxable income.

Warning: Payroll Cuts Affect Loan Forgiveness 


Because the whole point of the PPP is to help keep workers employed at their current level of pay, the loan forgiveness amount decreases if you lay folks off or reduce their wages.

  • If you keep all your workers at their current rates of pay, you are eligible for 100 percent loan forgiveness.
  • If you reduce your workforce, your loan forgiveness will be reduced by the percentage decrease in employees.

Example: Last year, you had 10 workers. This year, you have eight. Your loan forgiveness will be reduced by 20 percent.

You can compare your average number of full-time equivalent employees employed during the covered period (February 15, 2020, to June 30, 2020) to the number employed during your choice of

  • February 15, 2019, to June 30, 2019, or
  • January 1, 2020, to February 29, 2020.
  • If you reduce by more than 25 percent (as compared to the most recent full quarter before the covered period) the pay of a worker making less than $100,000 annually, your loan forgiveness decreases by the amount in excess of 25 percent.

Example: Last quarter, Jim was earning $75,000 on an annual basis. You still have Jim on the payroll but have reduced his salary to $54,750 annually. Jim’s pay has decreased by 27 percent, so the amount of your PPP loan forgiven is reduced by the excess 2 percent.

Here is some good news: If you have already laid workers off or made pay cuts, it’s not too late to set things right. If you hire back laid-off workers by June 30, 2020, or rescind pay cuts by that date, you remain eligible for full loan forgiveness.

When Are Payments Due? Any non-forgiven amounts are subject to the terms negotiated by you and the lender, but the maximum terms of the loan are capped at 10 years and 4 percent interest.  Also, payments are deferred for at least six months and up to one year from the loan origination date.

What If You Already Applied for an EIDL for Coronavirus-Related Reasons? No problem—if you took out an EIDL on or after January 30, 2020, you can refinance the EIDL into the PPP for loan forgiveness purposes, but you can’t double-dip and use the loans for the same purposes.

Any remaining EIDL funds used for reasons other than the stated reasons above are a regular (albeit low-interest) loan that needs to be repaid.

How to Apply for a PPP Unlike EIDLs, which run directly through the SBA, PPP loans go through approved third-party lenders. Talk to your bank.


There’s no fee to apply, and your burden for demonstrating need is low. In addition to the appropriate documentation regarding your finances, you should only need make a good-faith showing that:

  • the loan is necessary to support your ongoing business operations in the current economic climate;
  • the funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments; and
  • you do not have a duplicate loan already pending or completed.


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