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Ppp Loan Mastery: Strategies For Success In The 2023 Landscape

Ppp Loan Mastery: Strategies For Success In The 2023 Landscape

Ppp Loan Mastery: Strategies For Success In The 2023 Landscape – Summary of the Payroll Protection Program (PPP) at a Glance Calculating the amount of the Payroll Protection Program (PPP) loan What is the amount of the Payroll Protection Program (PPP) loan used for? Payroll Protection Program (PPP) Loan Forgiveness Formula Understanding the “closing” period for Payroll Protection Program (PPP) loans. Expenses. Expenses that qualify for the Payroll Protection Program (PPP) are incurred or paid. Qualified labor costs identified by the Payroll Protection Program (PPP) are deceptively complex, especially for business owners, reducing loan forgiveness through employee retention or adequate compensation, the Payroll Protection Program (PPP) loan forgiveness strategies help

Earlier this year, in March 2020, Congress passed the Coronavirus Relief, Assistance, and Economic Security (CARES) Act to help individuals, businesses, healthcare facilities, and state and local governments meet their short-term cash flow needs. allocate funds for it. One provision of the CARES Act was the Payroll Protection Program (PPP), which authorized a total of $649 billion in potentially forgivable loans guaranteed by the Small Business Administration, allowing small business owners to keep their employees and reduce payroll deductions.

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Ppp Loan Mastery: Strategies For Success In The 2023 Landscape

Ppp Loan Mastery: Strategies For Success In The 2023 Landscape

For the forgiveness of PPP loans, it is necessary to spend the received funds on a predetermined set of eligible expenses. At least 60% of the forgiven PPP loan amount must be used for salary expenses (with certain restrictions that apply to entrepreneurs, not only wages and salaries, but also vacations, family and health insurance (including holidays)). ; group health insurance, retirement and state and local taxes) and the remaining funds (no more than 40%) will be paid for rent, mortgage interest, utilities and business interest on loans made by February 15, 2020.

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Certain payroll deduction limitations apply to business owners and may affect the amount of group health insurance, retirement benefits, and/or state and local taxes paid that apply to their self-employment. In addition, the forgivable amount of the loan only applies to expenses incurred or paid during the “covered period” of the loan.

If the loan is funded on or after June 5, 2020, the coverage period is 24 weeks from the date of the loan. For loans financed until June 5, 2020, the borrower has the option of choosing a longer coverage period of 24 or 8 weeks. Business owners who run payroll bi-weekly (or more frequently) have the option of using an “Alternative Payroll Coverage Period” that begins on the first day of the pay period that begins when they receive funding from the SDF. starts later (not the date PPP funds are received), which may allow higher labor costs for PPP loan forgiveness.

PPP loans were designed to help business owners retain their employees and mitigate wage cuts in times of financial difficulty; Thus, if an employer’s full-time (FTE) workforce is reduced by any amount, or if non-employee compensation is reduced, some loans (ie, more than $50,000) may be forgiven less. Employees (i.e., those with annual wages of less than $100,000) would be cut by more than 25% (although Congress made exceptions for borrowers who had to rehire workers or restore wages). He tried to do it).

To determine whether a change in full-time employees will affect the amount of SBI loan forgiveness, employers must compare the average weekly number of full-time employees for the coverage period from February 15 to June 30, 2019 or January 1, 2019. It must be based on the average weekly FTE. – 29 February 2020 (employers can choose a lower FTE period) where one FTE equals a 40-hour week regardless of the number of hours contributed (although employees cannot count this either) if they work more than 40 hours during this week (more than 1 FTE per week). A reduction in FTE leads to a corresponding reduction in PPP loan forgiveness; For example, a 20% reduction in FTE results in a 20% reduction in eligible loan forgiveness. Alternatively, employers may use the full-time “safe harbor” calculation if it produces a more favorable result; The safe harbor method counts employees who work 40 hours or more per week at 1 FTE and employees who work less than 40 hours per week at 0.5 FTE. Meanwhile, a reduction in compensation of more than 25% for workers with (previous) wages below $100,000 will result in a dollar-for-dollar reduction in the PPP loan forgivable amount (unless the reduction exceeds the 25% threshold). .. .

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At the end of the day, the bottom line is that advisors have different ideas on how to pair their small business owners with PPP loans while maximizing the forgivable amount. In particular, the choice of the specific period of coverage for which the borrower may be eligible can have a significant impact on the composition of the costs to be forgiven. The method of FTE calculation, the FTE comparison period used to determine whether an FTE will be reduced, and changes in employee wages (other than compensation) may also affect whether or not the applicable severance pay amount is reduced. And consultants should ensure that clients who are preparing

Jeffrey Levin, CPA/PFS, CFP, AIF, CWS, MSA is a leading financial planner for financial planning professionals, a leading online resource for financial planning professionals, and serves as Buckingham’s senior strategic wealth planner. In 2020, Jeffrey was named to Investor Magazine’s IA25, one of the top 25 voices in uncertain times. In 2020, Jeffrey was named a Young Advisor to Watch by Financial Advisor Magazine. Jeffrey is the recipient of the AICPA’s Financial Planning Division’s Standing Ovation Award for “exemplary professional achievement in personal financial planning services.” He was also named to InvestmentNews’ 2017 40 Under 40 class, which recognizes “achievements, contributions to the financial advisory industry, leadership and promise for the future.” Jeffrey is the creator and co-director of the Savvy IRA Planning® program, as well as the creator and co-director of the Savvy Tax Planning® program, both offered by Horsmouth, LLC. He is a regular contributor to Forbes.com as well as several industry publications and is often sought out by journalists for his insights. You can follow Jeff on Twitter @CPAPlanner.

On January 22, 2020, the Centers for Disease Control and Prevention (CDC) received notification of the first laboratory-confirmed case of COVID-19 in the United States. In the days, weeks, and months that followed, the virus continued to spread across the United States, creating a health crisis that has now claimed nearly a quarter of a million American lives.

Ppp Loan Mastery: Strategies For Success In The 2023 Landscape

Unfortunately, this only begins to tell the story of how one of the worst pandemics in American history has affected Americans. In addition to the tragic loss of life, the COVID-19 pandemic has also damaged the US economy. The seasonally adjusted unemployment rate jumped from 4% to nearly 15% almost overnight as more than 20 million Americans filed for unemployment benefits in April 2020 alone.

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While that number is an amazing 20 million, it could be a lot worse. It is worth noting that the Relief, Assistance, and Economic Security (CARES) Act of 2020 was signed into law by President Trump on March 27, 2020. The CARES Act was a more than $2 trillion aid package and included $349 billion in funds for the Program the Paycheck Protection Program (PPP) (which was eventually spearheaded by the Paycheck Protection Program and the $659 billion Health Care Improvement Act). A new type of small business loan that is fully guaranteed by the Small Business Administration.

These PPP loans helped many small business owners not only to survive the onset of the COVID-19 pandemic, but also to keep jobs for their employees. Loans are provided with minimum underwriting, an interest rate from 1% and a repayment period of 2 to 5 years (loans financed on or after June 5, 2020 have a 5-year maturity, while loans financed by will be financed on June 5, 2020. loan) , the repayment period is 2 years, provided that the borrower and lender mutually agree on an extension).

But while the terms of the loan were attractive, the cherry on top – great benefits for entrepreneurs, which attracted them enough.

In the first place – there was certainly an opportunity to participate in the loan (or maybe the whole).

Ppp Loan & Forgiveness For Nonprofits

However, the forgiveness of PPP loans is not automatic. Instead, in many cases, the choices and decisions business owners make, even months after taking out a loan, can play a significant role in how much their loan is forgiven. Counselors should therefore understand the rules of PPP loan forgiveness so that they can guide small entrepreneurs through the entire process.

The PPP was an unprecedented effort to get money into the hands of small entrepreneurs at a rapid pace, which is no small feat given the incredible number of small businesses that exist across the country. For this purpose, PPP relied on banks, credit unions and other approved lenders for underwriting.

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    1. Ppp Loan Mastery: Strategies For Success In The 2023 LandscapeFor the forgiveness of PPP loans, it is necessary to spend the received funds on a predetermined set of eligible expenses. At least 60% of the forgiven PPP loan amount must be used for salary expenses (with certain restrictions that apply to entrepreneurs, not only wages and salaries, but also vacations, family and health insurance (including holidays)). ; group health insurance, retirement and state and local taxes) and the remaining funds (no more than 40%) will be paid for rent, mortgage interest, utilities and business interest on loans made by February 15, 2020.How Our Smart Seo Strategy Increased Blend's Site Traffic 183%Certain payroll deduction limitations apply to business owners and may affect the amount of group health insurance, retirement benefits, and/or state and local taxes paid that apply to their self-employment. In addition, the forgivable amount of the loan only applies to expenses incurred or paid during the "covered period" of the loan.If the loan is funded on or after June 5, 2020, the coverage period is 24 weeks from the date of the loan. For loans financed until June 5, 2020, the borrower has the option of choosing a longer coverage period of 24 or 8 weeks. Business owners who run payroll bi-weekly (or more frequently) have the option of using an "Alternative Payroll Coverage Period" that begins on the first day of the pay period that begins when they receive funding from the SDF. starts later (not the date PPP funds are received), which may allow higher labor costs for PPP loan forgiveness.PPP loans were designed to help business owners retain their employees and mitigate wage cuts in times of financial difficulty; Thus, if an employer's full-time (FTE) workforce is reduced by any amount, or if non-employee compensation is reduced, some loans (ie, more than $50,000) may be forgiven less. Employees (i.e., those with annual wages of less than $100,000) would be cut by more than 25% (although Congress made exceptions for borrowers who had to rehire workers or restore wages). He tried to do it).To determine whether a change in full-time employees will affect the amount of SBI loan forgiveness, employers must compare the average weekly number of full-time employees for the coverage period from February 15 to June 30, 2019 or January 1, 2019. It must be based on the average weekly FTE. - 29 February 2020 (employers can choose a lower FTE period) where one FTE equals a 40-hour week regardless of the number of hours contributed (although employees cannot count this either) if they work more than 40 hours during this week (more than 1 FTE per week). A reduction in FTE leads to a corresponding reduction in PPP loan forgiveness; For example, a 20% reduction in FTE results in a 20% reduction in eligible loan forgiveness. Alternatively, employers may use the full-time "safe harbor" calculation if it produces a more favorable result; The safe harbor method counts employees who work 40 hours or more per week at 1 FTE and employees who work less than 40 hours per week at 0.5 FTE. Meanwhile, a reduction in compensation of more than 25% for workers with (previous) wages below $100,000 will result in a dollar-for-dollar reduction in the PPP loan forgivable amount (unless the reduction exceeds the 25% threshold). .. .Dominos Winning StrategiesAt the end of the day, the bottom line is that advisors have different ideas on how to pair their small business owners with PPP loans while maximizing the forgivable amount. In particular, the choice of the specific period of coverage for which the borrower may be eligible can have a significant impact on the composition of the costs to be forgiven. The method of FTE calculation, the FTE comparison period used to determine whether an FTE will be reduced, and changes in employee wages (other than compensation) may also affect whether or not the applicable severance pay amount is reduced. And consultants should ensure that clients who are preparingJeffrey Levin, CPA/PFS, CFP, AIF, CWS, MSA is a leading financial planner for financial planning professionals, a leading online resource for financial planning professionals, and serves as Buckingham's senior strategic wealth planner. In 2020, Jeffrey was named to Investor Magazine's IA25, one of the top 25 voices in uncertain times. In 2020, Jeffrey was named a Young Advisor to Watch by Financial Advisor Magazine. Jeffrey is the recipient of the AICPA's Financial Planning Division's Standing Ovation Award for "exemplary professional achievement in personal financial planning services." He was also named to InvestmentNews' 2017 40 Under 40 class, which recognizes "achievements, contributions to the financial advisory industry, leadership and promise for the future." Jeffrey is the creator and co-director of the Savvy IRA Planning® program, as well as the creator and co-director of the Savvy Tax Planning® program, both offered by Horsmouth, LLC. He is a regular contributor to Forbes.com as well as several industry publications and is often sought out by journalists for his insights. You can follow Jeff on Twitter @CPAPlanner.On January 22, 2020, the Centers for Disease Control and Prevention (CDC) received notification of the first laboratory-confirmed case of COVID-19 in the United States. In the days, weeks, and months that followed, the virus continued to spread across the United States, creating a health crisis that has now claimed nearly a quarter of a million American lives.Unfortunately, this only begins to tell the story of how one of the worst pandemics in American history has affected Americans. In addition to the tragic loss of life, the COVID-19 pandemic has also damaged the US economy. The seasonally adjusted unemployment rate jumped from 4% to nearly 15% almost overnight as more than 20 million Americans filed for unemployment benefits in April 2020 alone.Asia Infrastructure Forum 2022While that number is an amazing 20 million, it could be a lot worse. It is worth noting that the Relief, Assistance, and Economic Security (CARES) Act of 2020 was signed into law by President Trump on March 27, 2020. The CARES Act was a more than $2 trillion aid package and included $349 billion in funds for the Program the Paycheck Protection Program (PPP) (which was eventually spearheaded by the Paycheck Protection Program and the $659 billion Health Care Improvement Act). A new type of small business loan that is fully guaranteed by the Small Business Administration.These PPP loans helped many small business owners not only to survive the onset of the COVID-19 pandemic, but also to keep jobs for their employees. Loans are provided with minimum underwriting, an interest rate from 1% and a repayment period of 2 to 5 years (loans financed on or after June 5, 2020 have a 5-year maturity, while loans financed by will be financed on June 5, 2020. loan) , the repayment period is 2 years, provided that the borrower and lender mutually agree on an extension).But while the terms of the loan were attractive, the cherry on top - great benefits for entrepreneurs, which attracted them enough.In the first place - there was certainly an opportunity to participate in the loan (or maybe the whole).Ppp Loan & Forgiveness For Nonprofits
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