PPP loan 2nd Draw

So, Wayne Scully with W Scully CPA PC, focused on fixing America's tax problems. Folks, listen. Recently, my son went into a major bank to open a business bank account to start his own business. So proud of the kid. He was told by a banker that he qualifies for the PPP law. Now, I have to sit and explain to my son that, "Hey, son. You don't qualify for this loan," because really his business started in 2021, and that's what folks need to know. The business must have started no later than February of 2020 for you to qualify for this loan. So, it was totally misinformed, but it was my job to obviously explain to him that, "Hey, son. This is just not going to happen for you, unfortunately."

               So, basically today I'm here to talk about the new PPP loan program offered by the Small Business Administration, otherwise known as SBA and the Paycheck Protection Program, or as it's called PPP. This has to do with the Second Draw. The First Draw last year, that program ended, closed out towards the end of the year. Then they restarted the program, and they call it the Second Draw. So January 6th, the Economic Aid to Hard-hit Small Businesses, Nonprofits, and Venues Act was signed into law and resulted in the new PPP guidelines. This basically provides funding up until March 31st of this year, and the Second Draw sets priorities for small business and allots $284 billion towards that effort.

               Included in that, they were talking about job retention and covering certain expenses. So the changes provide really targeted relief and simplifies the loan forgiveness process to ensure a path to recovery for small businesses so hard hit. I mean, we can all appreciate that, right? We either know someone or we ourselves are in that kind of bind that we need this help. So it's good that this program is around, and it's there to help folks. The PPP program reopened its doors for lending on January 11th, and it's open to existing and also to new borrowers. January 11th, as I mentioned before, is the beginning date for the First Draw, and January 13th is the beginning date for the Second Draw.

               January 15th is going to be open to small lenders, and in January 19th opened to large lenders. So, that's just going to give you a timeline as far as if you're looking to get money from this program, you have to be attuned to those dates. So, key updates. The loan covers any period between eight to 24 weeks by the borrower's choice, so you choose what period you want to pay to disperse those funds over. Then it covers additional costs such as rent, utilities, equipment, property damage costs, supplier costs, and worker protection.

               It's eligibility was expanded to include a 501(c)(6) entities such as business leagues, trade boards, et cetera, housing co-ops, and destination marketing organizations known as tourism boards and other types of organizations would qualify. As I said before, it's looking to help nonprofits. So, that's that. It provides greater flexibility for seasonal employees and certain existing borrowers can modify the First Draw or in other words they can refinance their first loan, and it gives them an opportunity to modify the first loan. Then existing borrowers can also be eligible for a Second Draw, certain existing borrowers, not everyone.

               Guys, here's some general eligibility requirements for the Second Draw. Number one, you must have received the First Draw, spent it, or you're going to spend in full for authorized purposes. Okay? That's important. If it's not spent for authorized purposes, you may have an issue, and your business can't have more than 300 employees. All right. You have to be able to show that your gross receipts reduced by at least 25% when you compare two quarters in 2019 and 2020. A

               And just one more tidbit for you guys. There's a huge fraud alert I have to make you aware of. I learned just recently from a former IRS revenue officer that the IRS will be auditing the PPP loans. I suppose the IRS has greater knowledge and tools and resources with respect to audit these kinds of loans, whereas the SBA may not. So I suppose that joint venture between the two agencies to audit those loans. So please be careful. Use the loan for an authorized purpose. First of all, make sure you quantify for the loan. Don't you know, trying to get a loan that you don't qualify for because it may come back and bite you in the proverbial you know what.

               So, basically for any information call your tax advisor, and if you have none, give me a call. My name is Wayne Scully, and I'm with W Scully CPA PC focused on fixing America's tax problems. Our firm specializes in tax resolution matters, and we serve clients virtually. Make an appointment by visiting ww.wscullycp.com. That's ww.wscullycpa.com, or call me toll free (855) 254-1892. Please comment, like, and share this video. Thanks guys. Talk to you soon.