new sba loan rules

*Can’t be combined with any other offer. So an employee going from 40 to 24 hours per week, which results in a reduction in pay due to less hours worked, will not count as a salary reduction (but still as an FTE reduction) for the amount that the salary declined as a result of the change in hours. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face. If the person ALSO has a rate reduction and hours reduction, nothing here prevents them from being counted in both as appropriate. After releasing the PPP Loan Forgiveness application on May 15, 2020, the SBA has now released additional “Interim Final Rules” or IFR in relation to the forgiveness procedures and regulations. Freedomtax Accounting and Multiservices Inc. is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience. SBA is currently offering PPP loans until May 31, 2021. Tax Season 2021 is Here: Cerini & Associates, LLP is a full service Long Island accounting firm built on value-added ideas and integrity. For more Coronavirus updates and resources, click here. Find a lender: Get matched with a lender; Search for lenders in your area; 2. New Rules of Lender’s Responsibilities for SBA 7(a) Guaranty Purchases; Clarification of a “Loan Agent” Clarification of a “Loan Packager” Clarification of the “Two Master Rule” Clarification of a “Loan Service Provider” New Definition of a “Loan Broker” Legal maximum limits how Loan Packagers can be paid; Legal maximum limits how Loan Service Providers can be paid Employees that are furloughed or not working still count for incurred for when they would have been working. On January 1st, 2018, the SBA enacted a series of new rules making it easier for individuals to use SBA 7 (a) loans to purchase a business. The IFR was another welcome piece of guidance that provided more clarity for borrowers, particularly covering information regarding bonus or additional payroll and confirming no double penalty for a reduction in FTE and salary. These IFRs will generally carry a higher legal standing than the applications themselves and help to formalize the rules that were presented with the application. Subsequent to the June 5, 2020 enactment of the PPP Flexibility Act, on June 22, 2020, the SBA posted an interim final rule that reconciled the PPP Flexibility Act into the loan forgiveness application process. Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5. 1016 E Osceola Parkway, Kissimmee, FL 34744 “More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which … Technically the IFR has a higher standing than the application, so it is likely that hundredth will be how it works. The new IFR states that salary or wage reductions apply only to the portion of the decline in employee salary or wages that is not attributable to the FTE reduction. Explicit confirmation that a borrower can use both payroll costs incurred or paid during the covered period. SBA loans typically have lower rates and longer terms than you could otherwise qualify for with a conventional loan. ET, SBA established a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees. New SBA PPP Rules & FAQ . 30 hours is a .75 FTE). This gave lenders and community partners more time to work with the smallest businesses to submit their applications, while also ensuring that larger PPP-eligible businesses still had plenty of time to apply for and receive … If two loans are approved within 90 days of each other, the aggregate amount of the loans to one business, including affiliates, guaranteed by the SBA can’t exceed $5 million. PPP borrowers can have their first- and second-draw loans forgiven if the funds are … Print this voucher and bring it with you to our offices at DISCLAIMER The SBA also released on Friday an IFR that covers some guidance on the SBA review procedures, which can be found here. 1. Eligible costs. Fill in the information below and get a personalized over-the-phone consultation. There are also still many uncovered topics, include retirement plan contribution windows, further guidance on utilities, and what health-care expenses may be covered. IRS keeps updating its rules and regulations. The IFR clearly states that a nonpayroll can be eligible for forgiveness if it were paid or incurred and paid by the next regular billing cycle during the covered period. Nothing in the IFR addresses, other than the confirmation of its existence, the use of the simplified method for FTEs wherein any employee working less than 40 hours is counted as a .5 FTE, which could allow borrowers to quickly pad FTE counts with employees only working a few hours. New clients only. The revised rule makes an SBA-guaranteed ESOP loan potentially more attractive for sellers who want to sell their companies to an ESOP but do not qualify for conventional bank financing for cash flow or collateral reasons. The new rules clarify that a reduction in business activity as a result of a state or local shutdown order is sufficient to take advantage of the loan forgiveness exemption. Below, we have highlighted a few of the most noteworthy aspects of these new rules. This interim final rule (SBA Interim Final Rule 2) supplements an earlier SBA Interim Final Rule (SBA-2020-0015), which specifically did not address affiliation. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. The U.S. Small Business Administration (SBA) issued new Paycheck Protection Program (PPP) rules that allow self-employed individuals who file Form 1040, Schedule C, Profit or Loss From Business, to calculate their maximum loan amount using gross income instead of net profit. The SBA Press Release published March 24, 2021 reads as follows: “The U.S. Small Business Administration is increasing the maximum amount small businesses and non-profit organizations can borrow through its COVID-19 Economic Injury Disaster Loan (EIDL) program. The IFR specifically states both are considered other compensation and eligible, with the statement too that payroll costs are broadly defined. Any new loan applications and any loans in the process when the new loan limits are implemented will automatically be considered for loans covering 24 months of economic injury up to a maximum of $500,000. This is good news since the banks have been waiting on SBA guidance on how this new PPP loan formula for self-employed was going to work. If the reduction was to $440 per week for 24 hours, this is still a salary reduction of more than 25% that needs to be included as a reduction of forgiveness in the amount of $80 over the covered period ($10 per week above 25% ($600 x .75 = $450) -$440 per week x 8 weeks). 7. Starting the week of April 6, 2021, the SBA is raising the loan limit for the COVID-19 EIDL program from 6-months of economic injury with a maximum loan amount of $150,000 to up to 24-months of economic injury with a maximum loan amount of $500,000. Fill in the form below to get your exclusive discount voucher. President Biden announced program changes to make access to PPP loans more equitable. The change opens the door for larger loans to self-employed individuals, many of whom … We make sure that our clients stay up to date with the latest changes. The SBA notes they considered a 30-hour week at one point but, think 40 is the most accurate measure for most employers. First Draw PPP Loans. The PPP Flexibility Act created a new exemption from the loan forgiveness reduction based on FTE … Let us assist you on your way to financial freedom. LinkedIn0Tweet0 Late Friday evening, the Small Business Administration (SBA) issued an Interim Final Rule on affiliation, which was posted to the U.S. Treasury Department’s Paycheck Protection Program (PPP) loan website. New SBA Loan Rules For COVID Relief This latest pandemic relief package makes the following changes to the SBA’s 7 (a) and 504 Microloan programs. Step 4: Add the outstanding amount of any economic injury disaster Loan (EIDL) made between January 31, 2020, The new IFR formalizes this FAQ and adds a new wrinkle, requiring borrowers to notify the state unemployment office (under a new procedure to follow) of these rejections. However, the pandemic has lasted longer than expected, and they need larger loans. How much can you borrow under the new rules? Fill in the form below and one of our specialists will be in touch soon! Loan increases Loans approved prior to April 7, 2021 for less than $500,000 are likely eligible for an increase based on new loan maximum amounts announced March 24, 2021. Start with the gross income you report on Line 7 of your Schedule C. If you have no employees, you simply put … With many employees being paid a salary, some borrowers were concerned that a reduction in hours that in turn reduced salary could end up being a double penalty for a borrower. FTEs remain calculated at 40-hours, but the IFR uses more digits. 10 year term for SBA 7a business acquisition loans 25 year term for SBA 504... 10 year term for SBA 7a business acquisition loans 25 year term for SBA 504 real estate loans Buyer Equity … Over the weekend, SBA issued additional guidance on this process by issuing two new interim final rules on loan forgiveness and the loan review process, respectively. The updated guidelines also included a new rule for businesses whose gross income is more than $150,000 — these firms could later be subject to a … The IFR makes mention of the 25% limitation, which should limit nonpayroll costs inherently. By Jeff Drew. Ed is a Partner in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. 3. Identify a loan: First Draw PPP loans: If you have not received a PPP loan before, First Draw PPP loans are available to you. The new Businesses that received a loan subject to the previous loan limit can submit a request for an increase at this time. The SBA released a new PPP 1 loan application form for the Schedule C filers where if you file a Schedule C and now you can use your 2019 Schedule C or your 2020 Schedule C and you have not received a PPP 1, you can apply for the PPP loan with the new formula. The SBA FAQs in the past offered a “safe harbor” to borrowers, stating that any borrower who makes a bona fide written offer to rehire (at the same rate of pay) and the employee rejects will not face a penalty for reduction of FTEs. We are here to help our small businesses and that is why I’m proud to more than triple the amount of funding they can access,” said SBA Administrator Isabella Casillas Guzman. As such, this loan is meant to replace a temporary loss of revenue. Freedomtax Accounting and Multiservices Inc. or its members cannot be held liable for any use or misuse of this content. or CALL US at (407) 344-1012. Until this IFR, there were some lingering questions as to if these would be forgiveness eligible costs. These employee’s compensation count as incurred when they would have otherwise been working if not for the pandemic. In the provided example, a borrower received a loan on June 1st and made payments of May and June electricity (note that May is before the date of loan disbursement, so an arrears payment is allowed) and that the prorated amount of the July payment can be eligible, so long as it is paid by the next regular cycle. The Economic Aid Act reauthorizes lending under the PPP through March 31, … New Rule on Loan Forgiveness 4. 8. Like other guidance, this would also be classified as borrower friendly. Many borrowers who received PPP loan funding may still have employees they are paying not to work or otherwise on paid leave. This gives borrowers more flexibility in getting up to the maximum allowable, as it conceptually allows borrowers to have more than 8 weeks of payroll in the forgiveness period – the amount paid during the start of the covered period and the amounts incurred and paid thereafter. The IFR also provides a few more key updates for borrowers. March 3, 2021. Fill in the information below to request a callback from one of our experts. 30 hours is a .8 FTE) but the examples in the IFR are to the nearest hundredth (i.e. SBA releases the official rules on how the new PPP loan calculation formula for the self-employed, independent contractor, sole proprietor, and all Schedule C filers. Your lender is responsible for notifying you of the forgiveness amount paid by SBA and the date on … The maximum loan amount for a standard SBA 7 (a) loan is $5 million. 3 . See if You Qualify for New COVID-19 Tax Credits. The new SBA Covid-19 EIDL Loan will provide 24 months of operational expenses to small businesses impacted by the Coronavirus pandemic. *Can't be combined with any other offer. So, if an employee making $1,000 per week was reduced to 3 days (24 hours) at $600 per week, there is only an FTE and no salary reduction. The EIDL is designed to help businesses fulfill financial obligations and operating expenses that could have been met if COVID-19, or a similar disaster never happened. One of the bigger, and frankly, less pleasant surprises borrowers found with the release of the forgiveness application was the imposition of a cap on the compensation of “owner-employees” to be limited to 8/52 their 2019 compensation. In order to shift all EIDL payments to 2022, SBA will extend the first payment due date for disaster loans made in 2020 to 24-months from the date of the note and to 18-months from the date of the note for all loans made in the calendar year 2021.”, Source – https://www.sba.gov/article/2021/mar/…​, #eidl​ #eidlloan​ #sbaeidl​ #neweidl​ #eidl2021, Got Questions?Get Answers from One of Our Financial Advisors. or CALL US at (407) 344-1012. Explicit confirmation that a borrower can use both payroll costs incurred or paid during the covered … Please fill in the information below and one of our experts will be in touch soon. “More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which provide low-interest emergency working capital to help save their businesses. Many have called on SBA to remove the $150,000 cap. 1. The IFR only addresses advance payments of mortgages, meaning that advance utility or rent payments seem to be allowable. If SBA undertakes a review of your loan, your lender will notify you of the review and the SBA loan review decision. Many borrowers were unpleasantly surprised when they saw the SBA FTE calculation was based on 40-hour work week, rather than something smaller. This video is intended for educational purposes and should not be taken as legal or tax advice. The U.S. Small Business Administration launched a new round of Economic Injury Disaster Loan (EIDL). Specifically, on February 24, 2021, at 9:00 a.m. You have the right to appeal certain SBA loan review decisions. SBA RRF - Restaurant Revitalization Fund Application Registration Portal is Open, Restaurant Revitalization Fund Start Date is April 30, 2021 - SBA Restaurant Grant, NEW SBA Restaurant Revitalization Fund - Up to $10 Million SBA Grant for Restaurants, NEW $5000 SBA Grant - Supplemental Targeted Advance, NEW SBA EIDL Loan Increase Online Application - Up to $500,000, How Much EIDL Loan Increase Can I Get 2021 | Amount of SBA EIDL Loan Increase, NEW SBA EIDL Loan 2021 Increase Up to $500,000 Starting April 6, 2021, Ten Tips to Help You Choose a Tax Preparer, Eight Facts to Help Determine Your Correct Filing Status. The Trump administration said Monday it will release new rules and forgiveness guidelines for small business owners who received a loan through the … How Does Your Government Funding Impact your CARES Act ... Cerini Nonprofit Connection: Monthly Webinar Series, COVID-19: Cybersecurity Considerations for Working Remotely, Accounting Standards Update (ASU) 2017-07 – Compensation – Retirement Benefits. 1016 E Osceola Parkway, Kissimmee, FL 34744 6. SBA Loan Calculator Results Include New Federal Reserve Rate Hike and New SBA Loan Rules LOS ANGELES, CA (PR Newswire) December 13, 2017: YourSBA.com has updated it’s popular SBA loan calculator tools for the new Federal Reserve interest rate increase announced today. The SBA is allowing some first-time recipients to get a second PPP loan, but not all of them. Unemployment Fraud Wreaking Havoc in Schools, Guest Article: Career Day Inc. – Virtual Programs for Schools. Owner-employee compensation is capped. New clients only. In the original application, there was still some question as to whether costs had to be both incurred and paid or if they were able to be incurred or paid to count. The regulations include an example which states payroll costs paid during an alternative covered period (without any reference to when incurred) are eligible for forgiveness and in addition, payroll costs incurred during this alternative covered period and paid by the next regular cycle will be eligible for forgiveness. SBA will reach out directly via email and provide more details about how businesses can request an increase closer to the April 6 implementation date. The new rules are: Down Payment now 10%, 90% SBA financing! The IFR states that an expense that is either paid or incurred during the 56-day covered period will be a forgiveness eligible cost. Get A Free quote. Specifically, the SBA modified its Standard Operating Procedures (SOPs), including SOP 50 10 5 (J), which reduces equity requirements for business acquisitions and … Note, however, the limit for compensation is still based on 8-weeks prorated at $100,000 for the covered period, or $15,385. Borrowers will now have to report any declined offers to the state unemployment office. To be eligible for a “second-draw” PPP loan a business … New SBA Loan Rules Make It Easier for Borrowers to Acquire Businesses. SBA Export Express loans have a maximum loan amount of $500,000. SBA Provides IFR with Limited Guidance on Review Process for Loans. Borrowers will NOT be double penalized for a salary and FTE Reduction. The maximum for SBA Express loans is $350,000. Starting the week of April 6, 2021 businesses will be able to apply for a higher SBA EIDL Loan amount of up to $500,000. Nonpayroll costs also can either be paid or incurred, including those in arrears. This new relief builds on SBA’s previous March 12, 2021 announcement that the agency would extend deferment periods for all disaster loans, including COVID-19 EIDLs until 2022 to offer more time for businesses to build back. On the calculation, the application for forgiveness has the FTE’s rounded to the nearest tenth (i.e. Many borrowers have been looking to increase rates of pay for staff providing services during the pandemic in the form of hazard pay or bonuses. Businesses that receive a loan subject to the current limits do not need to submit a request for an increase at this time. While not specifically stated, this limitation should cover: One major open point that still remains is if this will impact direct relationships of these categories, meaning is there a limit on bona-fide payments to children or spouses of owner-employees or partners? Self-employed and gig workers who have been waiting for new rules that would mean larger forgivable loans through the Paycheck Protection Program can now move forward with their applications. New and existing 7 (a) and 504 Microloans from the SBA will get three months of forgiveness of principal and interest payments, capped at $9,000/month. There are still rumblings of an extended period of up to 24 weeks to use funds which has bipartisan support, but has yet to be enacted; until then borrowers still need to follow the guidance and act as if this will be an 8 week program. How Does Your Government Funding Impact your CARES Act Funding? Starting the week of April 6, 2021, the SBA is raising the loan limit for the COVID-19 EIDL program from 6-months of economic injury with a maximum loan amount of $150,000 to up to 24-months of economic injury with a maximum loan amount of $500,000. Print this voucher and bring it with you to our offices at 5. Increase at this time recipients to get a personalized over-the-phone consultation on loan forgiveness SBA loans typically have lower and... Get matched with a conventional loan and resources, click here tenth ( i.e please fill in the information to. Increase new sba loan rules this time found here IFR only addresses advance payments of mortgages, meaning that utility. 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