January 11, 2021: The next round of the popular Paycheck Protection Program technically opens today — but only for a very small number of lenders, called Community Financial Institutions. According to CPA Practice Advisor, “To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter.”
In the finance industry, this is being referred to as the “Soft Launch” of the PPP. The reason for this tiered approach is that these institutions (CFIs), and the disadvantaged businesses they often represent — many of them from underserved communities — were mostly shut-out of the first round of PPP back in April. Brian Thompson published a great article in Forbes yesterday, explaining the details, that I encourage you to read. In short, the SBA is trying to equalize access to business ownership and support for black and brown communities. So if you’re not in one of these groups, today’s opening is not meant for you. Please be patient.
Although only this small group of lenders will be the included in the Soft Launch, unfortunately very few of them will be prepared to take full loan applications this week. These CFIs are generally only accepting applications from their existing customers, and do not have the processing capacity to receive an influx of applications, especially from those outside the communities they serve.
My recommendation is to continue with the strategy that you have already devised — whether that’s working with your existing banking relationship, or with your CPA to apply through a lending portal (I am using the CPA Business Funding Portal, a joint program between the AICPA and biz2credit — more here — you can also use the platform for free to help prepare applications to be sent to clients’ existing lenders).
See my recent blog posts for more information about the details of this round of the Paycheck Protection Program, or how to determine whether or not you qualify.
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heidineufs@aol.com> wrote:
hey there we are just about the push our 2nd round PPP
and the whole partner calculation came up
Our owners have 20 locations with 20 EIN and round each has its own application
the partners did not include K1 last time and do not draw salary
If they have k1 for each of the 20 locations can they submit it that way are they only entitled to submit for 1 EIN
2. One of the partners has another company not with this partner can he also submit his K1 to this other company unrelated to the shared company it is also an LLC with 5 minor partners that total the other 50%?
Okay, so each partnership issues a K-1 to each partner. Those partnerships — each one separately — can just take the amount on Schedule K, line 14 (which is the equivalent of adding up line 14a on each K-1 for that partnership), as long as that doesn’t exceed $100,000 per partner. Then each partnership applies separately. (If the partnership has employees, then add the total from the annual Form 940 as well.) But the amount that is forgiven cannot exceed — for each partner — 2.5 months of what they earned in 2019. If you do the calculation correctly, it should work out to be the same total, presuming no partners have departed.
But here’s the catch — the total that is forgiven for each partner can’t exceed $100,000 — across all entities that have applied for PPP funds. This was not initially part of the rules; it was in later guidance. So you can apply for the full total (each partnership applies separately, using Form 940 + health insurance + SUTA for payroll if they have it; plus Form 1065, Sch K Line 14) as long as it doesn’t exceed $100k per partnership… but when applying for forgiveness you will be limited to each partner getting 2.5 months’ worth of $100k as a limit across ALL partnerships.
I hope that makes sense — it is complicated!