PPP Loan Forgiveness Made Easier

Small businesses given more time and flexibility to use loan proceeds

PPP loan forgiveness just got a lot easier thanks to the Paycheck Protection Flexibility Act passed by Congress. This new law gives businesses more flexibility to use the popular PPP loan and will result in an easier time qualifying for complete loan forgiveness.

Here is what you need to know:

December 31, 2020 is the new deadline to spend loan proceeds. When the PPP program was rolled out this spring, businesses were given 8 weeks after loan funding to use the loan’s proceeds if they wanted to qualify for loan forgiveness. That timeline has now moved to 24 weeks. Due to the extended stay-at-home orders and further assessment of the pandemic, the new deadline is now effectively December 31, 2020.

More loan proceeds can be used for non-payroll expenses. The original law required 75% of loan proceeds to be spent on payroll. For businesses with high cost of goods sold or who had trouble convincing furloughed workers to return to work, hitting this 75% threshold was problematic. The new law reduces the amount of loan proceeds required to be spent on payroll to 60%.

More flexibility in fully restoring workforce. Borrowers now have through December 31, 2020 to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. There are three exceptions allowed for not having a fully-restored workforce by Dec. 31. Borrowers can adjust their loan forgiveness calculations because of:

  • Employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic;

  • Difficulty finding qualified employees;

  • COVID-19 related operating restrictions

Loan terms extended. For loans that do not qualify for forgiveness, borrowers now have up to five years to repay the loan instead of two. The interest rate remains at 1%. Since your bank has 60 days to process your loan forgiveness application and the SBA has 90 days to process the request, your initial payment is now effectively five to six months after your forgiveness application.

What you need to do: Remain in contact with your lending institution about the loan forgiveness application. Also consider reaching out to your legislators to let your voice be heard on how you were impacted and to share your story on your PPP loan experience as several U.S. Senators indicated that there will be more changes in the future regarding the program.

Gov. DeWine, BWC propose $1.6 billion dividend to Ohio employers

Move made to ease COVID-19 financial impact

COLUMBUS – Ohio Governor Mike DeWine and Ohio Bureau of Workers' Compensation (BWC) Administrator/CEO Stephanie McCloud today proposed giving up to $1.6 billion to Ohio employers this spring to ease the economic impact of the coronavirus (COVID-19) pandemic on Ohio’s economy and business community.

"This is great news for Ohio’s businesses, and will assist in relieving some of the financial pressures many are experiencing,” said Governor Mike DeWine. “Administrator McCloud and I both encourage businesses to reinvest this money in the health and safety of their employees.” 

BWC’s Board of Directors will hold an emergency virtual meeting Friday to vote on the proposed dividend, which equals 100% of the premium employers paid in policy year 2018. As in previous years, the dividend is possible because of strong investment returns on employer premiums, a declining number of claims each year, and prudent fiscal management.

"This dividend is possible in no small part to the employers in our state that have worked hard to improve workplace safety and reduce injury claims,” said Administrator McCloud, noting checks will be going to employers later this month. “We are also fortunate that despite the market’s recent downturn, our fiscal position is strong enough to allow for this dividend while maintaining funds to take care of injured workers for years to come.”

BWC provides workers’ compensation insurance to more than 248,000 private and public employers in Ohio. Should the proposed dividend total $1.6 billion:

  • An estimated $1.4 billion would go to private employers.

  • Approximately $200 million would go to local government taxing districts (counties, cities, schools, etc.).

The proposal follows other recent moves by BWC to ease the strain on employers this year. In late March, BWC told employers they could defer their monthly premium installment payments for March, April, and May until June 1. BWC also waived or postponed some requirements and deadlines for several programs that reduce employer premiums and applied the discounts automatically.

If approved by the board, the dividend would be BWC’s sixth of $1 billion or more since 2013 and seventh overall in that time. It also continues BWC’S trend of lowering workers’ comp costs for Ohio’s private and public employers. BWC has repeatedly lowered premium rates in recent years, including a 10% cut for public employers that took effect in January and a 13% cut for private employers that begins July 1.

In total, BWC has saved employers approximately $10 billion in workers’ comp costs through dividends, credits, rate reductions and greater efficiencies since 2011.

What the Coronavirus Stimulus Package Means for You

US-Senate-building.jpg

March 27, 2020 / TurboTaxBlogTeam

Today, the Coronavirus Aid, Relief and Economic Security Act (CARES) — a $2 trillion stimulus package to provide financial relief to individuals, families and businesses — was signed into law. The 2020 coronavirus stimulus package will deliver relief through a range of measures, including an advanced tax rebate to taxpayers. 

Stimulus Checks for Individuals and Joint Taxpayers

Stimulus checks — up to $1,200 for individuals, $2,400 for joint taxpayers and an additional $500 for each qualifying child — will be based on information from your most recent tax filings, either 2019 or 2018 if you have not yet filed this season. 

The first step you should take right now is to file your 2019 tax return, if you have not already. And, if you are getting a tax refund, choose to receive that refund through direct deposit. This will ensure that the IRS has the most current tax filing and direct deposit information for you, which they will use to determine individual stimulus check amounts.

Recovery Rebate 

According to the Tax Policy Center, approximately 90% of Americans will be eligible to receive full or partial payments through the CARES Act.

If you have an adjusted gross income (AGI) of up to $75,000 ($150,000 married filing jointly), you should be eligible for the full amount of the recovery rebate. 

*Note, adjusted gross income (AGI) is your gross income like wages, salaries, or interest minus adjustments for eligible deductions like student loan interest or your IRA deduction. Your AGI can be found on line 8b of your 2019 Form 1040.

As your AGI increases, the stimulus amount you get will go down. The stimulus check rebate completely phases out at $99,000 for single taxpayers, $146,500 for those filing as Head of Household and $198,000 for joint filers with no kids.

The stimulus check will be paid this year based on information from your most recent tax return and will be reconciled in tax year 2020 to ensure you received the correct rebate amount.

Student Loan Payment Relief 

Under the CARES Act, employers can still make student loan payments on behalf of their employees on a tax free basis, up to $5,250 annually. This means the loan payments would be excluded from the employee’s income. The provision is applicable on loan payments an employer makes from the day the bill was signed into law (March 27, 2020) through Jan. 21, 2021.

Increase in Unemployment Payments 

Unemployment payments will be increased by $600 weekly for four months through July 31, and the bill also includes those who were previously not eligible for unemployment, including part-time employees, freelancers, independent contractors, gig workers, and the self-employed. 

Financial Assistance Provided for Eligible Non-profits and Self-Employed Individuals  

The Small Business Administration’s loan program is now accessible to more businesses and has an increased cap on loans. This Act provides $349 billion for the Small Business Administration to distribute through a new loan program titled the Paycheck Protection Program (PPP), making non-profits, self-employed individuals and contractors eligible to receive assistance. 

The Federal Reserve lending program will also receive $454 billion in support — loans from this fund will be for no longer than 5 years and will be aimed at aiding nonprofits and businesses with around 500-10,000 employees with the goal of retaining at least 90% of their workforce with full compensation and benefits.  

Penalty Waived for Early Retirement Withdrawal 

If you need to take money out of your retirement plan ASAP, keep in mind that the 10 percent early withdrawal penalty will be waived on up to $100K of retirement funds withdrawn. 

Additionally, income attributable to such distributions would be subject to tax over three years, and you may recontribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions.

Delay of Social Security Payroll Tax Payment for Employers 

Employers, including the self-employed, can delay the payment of the employer portion of the Social Security payroll tax for the remainder of the year and pay back the liability over the next two years.

Be sure to keep checking back here for the most up to date tax information and changes in response to COVID-19.