EIDL Borrowers Beware of the Rewarded Whistleblowers!

EIDL Borrowers Beware of the Rewarded Whistleblowers!

EIDL Borrowers Beware of the Rewarded Whistleblowers!


It’s just not worth it! Whistleblowers are everywhere because they are protected and rewarded. So is accepting the loan without serious review really worth taking the money?

There are so many specific rules and regulations that many EIDL borrowers had failed to understand before accepting the loan which could put you in a situation to tell your client that their best course of action is to return the money immediately before whistleblowers report them.

As accounting professionals, we want to help our clients do the right things with managing their finances and sometimes we have to say the things they don’t want to hear but need to be said. If your client has accepted or is considering to apply and accept the EIDL, your eagle eye and mother’s concerning voice should be used when consulting your client.

So besides recommending that your client read all the details carefully and suggest they consult an attorney if needed, it’s important for you to know some of the important points like these: (just to name a few)

  • Businesses can’t take out dividends for over 30 years if they received an EIDL loan and do not repay it in full.
  • There’s fine print about a collateral agreement in the application for loan amounts greater than $25,000.
  • EIDL applications are still being accepted but the $10,000 advance on the loan that could be considered a grant, is no longer available.
  • All EIDL borrowers’ private details will be available in the public records because of the Freedom of Information Act, enumerated at 5 U.S.C. § 552. Violating a loan covenant can cause the interest rate on that loan to increase or even cause it to be considered in default.

Source: https://www.forbes.com/sites/alangassman/2020/07/28/many-eidl-loans-will-cause-disaster-for-unassuming-borrowers/#6473e5db3049

 

 

Covid Lawsuits and Claims Against Employers Increasing Nationwide

Covid Lawsuits and Claims Against Employers Increasing Nationwide

Covid Lawsuits and Claims Against Employers Increasing Nationwide

Watch out! Among everything else employers are facing during this pandemic to stay afloat, you can add liability lawsuits to the list. 

“Did you know that, “As of mid-June, more than 230 lawsuits directly related to labor and employment violations have been filed (including 30 class action suits). California leads the nation with 32 employment lawsuits already filed.” – Littler

As businesses are struggling to stay open and operational, the workplace liability lawsuits are piling up in the courts nationwide. It’s imperative for employers to stay up to date with federal, state, and local regulations during the pandemic to make sure they have an understanding of their employee’s rights.

There various types of lawsuits currently being filed against employers, but we wanted to inform all of you of the top 3 being seen across the nation.

Top 3 Types of COVID Lawsuits Against Employers:

1. Paid Leave Claims – Employers are seeing a rise in claims from employees alleging they were denied leave they were entitled to by way of the Families First Coronavirus Response Act (FFCRA). Employers need to makes sure their leave programs coordinate with these new regulations.
2. Discrimination Claims – Americans with Disabilities Act, which governs what medical information employers can seek from employees. With that said, laws that prohibit discrimination on the basis of age, pregnancy, and other bases are areas employers should be careful. Particularly where employers are beginning to return their employees to the workforce, they should be mindful of potential legal “pitfalls” even where they believe they are acting in an employee’s best interests.
3. RIFS and Downsizing ClaimsEmployers that have been forced to downsize their workforces should be mindful of the federal Worker Adjustment and Retraining Notification (WARN) Act. Under the WARN Act, employers may be required to provide 60 days’ notice to workers when they are laid off for an extended period, or when the employer closes its business. It is unclear as to what exemptions they may have when related to Covid-19.

 

We know that some of you may have HR questions relating to complying with Covid workplace regulations, so we wanted to present a resource for our CPA MOMS community.

We have partnered nationally with ADP who is a trusted advisor in the HR/Payroll industry and it’s their priority to ensure you have the proper tools and expertise necessary to safely re-open and maintain your business. Our national rep, Rachel, is helping clients cut costs and gain access to more hands-on support during this tumultuous time.

If you are interested in setting up a free consultation or getting more information, please fill out the contact form and she will get in touch you as soon as possible: CPA MOMS ADP Contact Form

 

Sources:
https://www.littler.com/publication-press/publication/covid-19-lawsuits-and-claims-increasing-courts-nationwide

 

 

President Trump Signs 5 Week PPP Application Extension into Law

President Trump Signs 5 Week PPP Application Extension into Law

President Trump Signs 5 Week PPP Application Extension into Law

Extended at the final hour! With a new application deadline, there is clarity on the PPP forgiveness guidelines. 

The President officially signed a five-week extension for PPP loan applications with a new deadline of August 8th. With approximately $130 billion of funding remaining, this is a huge opportunity for small business owners to access funding as the surge in COVID cases may case another partial or full shut down. With the new application deadline, we finally get more clarity to prepare for your work ahead. 

Guideline Update Highlights:

1. A borrower may apply for forgiveness any time on or before the maturity date of its loan – including prior to the end of its applicable covered period – if the borrower has used all the loan proceeds for which it is requesting forgiveness.
2. Borrowers that choose to apply for forgiveness prior to the end of their applicable covered period and who have reduced salaries or hourly wages for employees in excess of 25% must calculate such reductions for the full length of the covered period.
3. If a borrower does not apply for loan forgiveness within ten months after the last day of the covered period, or if the SBA determines that the loan is not eligible for forgiveness (in whole or in part), the borrower must begin paying principal and interest. If this occurs, the lender must notify the borrower of the date the first payment is due.

With the extension for PPP applications and the ease of forgiveness regulations, we are expecting to see a jump in applications during the next 5 weeks. Though some borrowers are finding it hard to match with lenders, the SBA launched their new lender matching tool which should help speed up their process in receiving funding.
(see prior blog post regarding the SBA Lender Matching Tool)

Congress has indicated that an additional COVID relief package will be considered in mid-July. As we receive more information regarding that relief we will be sure to keep you updated.

 

Sources:

https://www.forbes.com/sites/allbusiness/2020/07/08/ppp-loan-program-extended-loan-data-released-what-small-businesses-need-to-know/#43b77dfd7f11 
https://www.natlawreview.com/article/ppp-updates-borrower-details-released-application-extension-revisions-to-forgiveness

 

PPP Application Deadline 6/30/20 – Use SBA Lender Matching Tool

PPP Application Deadline 6/30/20 – Use SBA Lender Matching Tool

PPP Application Deadline 6/30/20 – Use SBA Lender Matching Tool

Too Little Too Late? With the Short Deadline, SBA Finally Launches a Lender Matching Tool to Make it Easier for Small Businesses to Access Funding. 

The SBA’s Lender Match resource is meant for pandemic-affected small businesses who haven’t applied for or received an approved PPP loan. It connects small businesses trying to access PPP funds with lenders before the loan application deadline of June 30, 2020.

How it Works:

“Within two business days after entering their information into the Lender Match platform, a borrower receives an email from lenders who have been matched with them. The borrower can see lenders’ requests for them to begin an application.  Borrowers are then able to begin the application process directly from the email they receive.”

Lender Match was on pause due to CARES Act implementation priorities and loan volume. It is now being reinstated for CDFIs and other Small Asset Lenders.  Leads will only be forwarded to CDFIs and Lenders with < $10b in assets until the PPP program ends on June 30, 2020, at which time Lender Match will be open to all participating SBA Lenders.  Lender Match not only connects borrowers with accessing PPP loans, but also other SBA lending products, such as 7(a), 504, Microloans, and Community Advantage loans which are currently offering debt relief.”

 

“SBA Rolls Out Dedicated Tool for Small Businesses to Connect with CDFIs, Small Asset Lenders Participating in PPP: The U.S. Small Business Administration.” Small Business Administration, 19 June 2020, www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-rolls-out-dedicated-tool-small-businesses-connect-cdfis-small-asset-lenders-participating-ppp?utm_medium=email&utm_source=govdelivery.

NEW PPP Guidance for the Self-Employed!

NEW PPP Guidance for the Self-Employed!

NEW PPP Guidance for the Self-Employed!

SBA Announces Full Forgiveness for Self-Employed Borrowers

As always, PPP stuff is ever-changing.

The SBA announces full forgiveness for SELF-EMPLOYED borrowers and releases the new PPP Loan Forgiveness application as well as the EZ Loan Forgiveness application. What do these new applications include that make life easier for borrowers? Let’s take a look…

Here’s a Forbes article explaining the forgiveness rules for the SELF-EMPLOYED:  https://www.forbes.com/sites/brianthompson1/2020/06/17/sba-finally-clarifies-ppp-loan-forgiveness-rules-full-forgiveness-for-self-employed-borrowers/#3f617b186741

That’s key for the SELF-EMPLOYED, who previously with the 8-week time period were limited to 8/52 of their 2019 Schedule C Net Income; now with the new 24 week time period, they can use the original amount from their loan application of 2019 Schedule C Net Income / 12 x 2.5.  That’s lovely for the self-employed.

Now what we’d really like is future guidance on owner compensation for owner-employees (i.e. S-Corp owners), who are still officially limited to the 8/52, although this article makes the assumption that the 2.5 calculation should apply to S-corp owners, we’d really like it to be spelled out instead of an assumption.

New applications, Fewer Calculations, and Less Documentation Bring New Questions

The revised PPP Loan Forgiveness Application is out and is down to 5 pages from 11 pages. In the revised version, Page 1 with the Loan Forgiveness Calc is the same as before, but the Certification includes language about the 24-week Covered Period being used and that the 2.5 calc ($100,000 of 2019 compensation / 12 x 2.5) = $20,833 cap per individual and that if the 8-week Covered Period is used, then the 8/52 calculation cap applies.

Once again, this is where they specifically mention employee or SELF-EMPLOYED individual/general partner but NOT an S-corp shareholder.

The Newly released applications consisted of a revised full loan application and the EZ loan application. The new EZ loan application applied to:

  • SELF-EMPLOYED borrowers with no employees; OR
  • Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number of hours of their employees; OR
  • Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.

Here is a link to the SBA summary of the Loan Forgiveness Application revisions as well as a link to download the instructions and applications themselves:  https://content.sba.gov/sites/default/files/2020-06/PPP%20Loan%20Forgiveness%20Application%20%28Revised%206.16.2020%29.pdf

Here’s one final link to a new summary from the Journal of Accountancy, which includes 2 additional links to both the revised Loan Forgiveness Application and the EZ Loan Forgiveness Application for SELF-EMPLOYED with no employees: https://www.journalofaccountancy.com/news/2020/jun/ppp-loan-forgiveness-applications.html

We will release all the updated information this week as it becomes public, so make sure you check back for updates!