PPP Loan

[Duane Anderson]

Dental client has been closed since mid March and expect to re-open in two weeks. They received a PPP loan a couple of days ago and one stipulation is that for the loan to be forgiven, at least 75% has to be used for payroll. When their office closed employees went on unemployment. So can the client give payroll advances to apply to future time to be worked and would that qualify as payroll in the PPP loan requirements. I have not been able to find an answer in my search...Thanks,,,Duane Anderson

PS...That make impact the employee's amount of unemployment since isn't the State on a cash collected basis and not hours worked.

[BOB W]

They can't get paychecks while on unemployment. When they open, employees need to drop unemployment, good luck, and return to work. Employer needs to give employees a choice. Return to work or find another job. And unemployment needs to be notified of any refusing to return to work.

He should still be good if only two weeks of the 8 are missing. If it is an LLC partnership, guaranteed payments are considered payroll.

Don't forget, any non qualifying loan proceeds can be returned. The balance of qualifying fund will still be forgiven.

[Lion]

If his FTE count is back to normal by 30 June, that's one hurdle. He can't prepay expenses. But, he can pay employees who are staying home to keep them off unemployment. He can give hazardous-conditions pay to those who return, especially in a dental office, that increases pay temporarily while at greater risk to get payroll up to 75% of the loan. If he doesn't have it all forgiven, he can return the excess or keep it at 1% for two years, a good rate if he needs the cash flow.

[BOB W]

Can I assume that if the employee count is satisfied and the 75% minimum payroll is met, then the remaining 25% is also forgiven, spent or not spent?

[TaxGuyBill]

Can I assume that if the employee count is satisfied and the 75% minimum payroll is met, then the remaining 25% is also forgiven, spent or not spent?

No. Only amounts spent on qualified things can be forgiven.

[Lion]

"incurred AND paid"

[BOB W]

Under PPP there are several non-payroll expenses allowed. One expense is called "transportation". Does anyone know what is included in transportation and what type of business can use this category?

[Lion]

That's one of the many remaining questions. I've heard it defined as gasoline for business vehicles. But, with a question mark!!

[New York Enrolled Agent]

That's one of the many remaining questions. I've heard it defined as gasoline for business vehicles. But, with a question mark!!

I think Lion is correct - there are ???? But, FWIW - from the SBA interim final rule (4/20) giving additional guidance for SE [emphasis added].

... and business utility payments (e.g., the cost of electricity in the warehouse you rent or gas you use driving your business vehicle). You must have claimed or be entitled to claim a deduction for such expenses on your 2019 Form 1040 Schedule C for them to be a permissible use during the eight-week period following the first disbursement of the loan (the “covered period”). ...

[Lion]

For Schedule C, do we know if non-payroll expenses are forgivable expenses? Or just allowable uses? For Schedule C, is anything other than 8/52 of line 31 from 2019 forgivable?

[BOB W]

Wow Lion, that sounds very broad.....????

I have a client that delivers meat products to deli's and supermarkets. Would his gas/diesel fuel be considered transportation expense? He is an S Corp.

[Lion]

NYEA gave a cite.