350 Billion PPP Funding is Already Exhausted

Apr 16, 2020

350 Billion PPP Funding is Already Exhausted

When the SBA announced that PPP loans would be made on a first-come, first-served basis, the feeding frenzy was immediate and intense. As of today, the SBA reports that the $350 billion has all been accounted for. Banks are being told to hold off on submitting new applications until Congress authorizes more funding.

President Trump and Treasury Secretary Mnuchin have requested a $250 billion infusion. What should be a no-brainer is proving more difficult. Both parties want to re-fund the program. Republicans want a quick and simple infusion, while Democrats want to make changes to the program and add spending for hospitals and state and local governments. This funding is crucial, and we expect it to come, but not for at least another week. And, it too, likely won’t be enough.

If you have still not filed your application, do so immediately, to, if nothing else, establish your place in line. Your bank may still be taking applications and holding them in anticipation of additional Congressional funding.

SBA Issues a New “Interim Final Rule” For Schedule C Sole Proprietors

On April 14th, the SBA issued a new “Interim Final Rule” that supplements the first one from April 2nd. This new one deals with Schedule C sole proprietorships – how they calculate their PPP loan requests and how their loan forgiveness. Essentially, they are being treated like second-class citizens compared to shareholders of corporations and partners in partnerships. Here’s how:

First, when calculating the PPP loan amount, a sole proprietor calculates its “payroll costs” including wages paid to employees in 2019 as well as health insurance and retirement plan benefits paid to employees. So far so good, this is the same as other business entities. However, when it comes to the owner’s payroll costs, there is a hard cap of $100,000 of annual wages. There is no addition for the owner’s 2019 retirement plan contributions and group health insurance expenses. With corporations and (we think) partnerships, the $100,000 limit only applies to wage-type income, and the owners can on their insurance premiums and plan contributions.

This is not fair treatment, and it comes after many sole proprietors have filed their applications, but it’s what the rules now require. If you are a sole proprietor and have filed your application using more generous assumptions, we recommend that you let the application process run its course. Do not pull the application and risk losing your place in line.

Second, when it comes time to apply for loan forgiveness, sole proprietors will again be capped based on $100,000 of annual compensation. In fact, the new rule says that the forgiveness will be based on the 2019 Schedule C net profit (line 31) and capped at $100,000 x 8/52 weeks, for a maximum of $15,385. The owner cannot add on his or her health insurance premiums and retirement plan contributions paid during the 8 week period of loan forgiveness. The owner can, however, take into account the wages, insurance and plan contributions for the employees. The owner can also include rent, utilities, and interest on real property or equipment debt, but only if the sole proprietor claimed deductions for these ancillary expenses in 2019 – another unnecessarily harsh restriction.

IRS Says PPP Borrowers Can Defer Employer Social Security Taxes Into 2021 and 2022

The CARES Act permits employers to defer the 6.2% employer share of Social Security taxes due between March 27 and December 31, 2020, with 50% of the deferred amount due by December 31, 2021, and 50% due by December 31, 2022. This will allow employers to keep extra cash in the business to help manage their recoveries. However, the Act states that employers who obtain PPP loans won’t qualify.

On April 10, IRS issued Notice 2022-22 which will permit employers with PPP loans to defer the payment of these for wages paid up until the date that the borrower’s lender makes its decision on the borrower’s loan forgiveness.

This will give employers potentially many months of payroll tax deferral. An employer with a PPP loan will have 90 days from the end of the 8-week period to apply to its bank for loan forgiveness. The bank then has 60 days to makes its decision. Given this timing, some employers will be able to defer their 6.2% share of Social Security taxes deep into the year.

Collier & Associates, Inc. will update our blog as the CARES Act progresses. We take pride in continuing to keep our subscribers and website visitors updated on current events during this extraordinary time.

We will work diligently to answer general inquiries via our website if time permits and in a little more detail within our Newsletters. However, if your questions are detailed in nature, please request to set up a conference call for a formal legal consultation. Thank you.


Collier & Associates, Inc. provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act on this information without seeking advice from professional advisors.


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  1. Evan Eisler on at 2:42 pm

    Thanks for excellent advice, over the past 30-40 years and especially now. My PPP loan was funded April 29th. I have a home office in NJ. I do not pay “rent,” but I do pay utilities (which I know are covered) and real estate taxes, which are part of a renter’s rent. Would part of the real estate tax be a legitimate expense under the PPP program and therefore forgivable during the first 8 weeks after funding?
    Also, my accountant proposed paying my staff in May even before we return with patients. If I pay full salaries, or even boosted salaries, during that time and it is within the 8 week forgivable period, the staff should be happy, it will cost me nothing, and it would allow me to pay myself as a sole proprietor and pay utilities etc too. If I wait until NJ says that I can see patients 4 of the 8 weeks would have disappeared.
    (and would staff be able to go back on unemployment and also get the federal $600 bonus if I had to stay closed beyond the 8 weeks?)
    Thanks for your time and expertise It’s appreciated. Evan Eisler

  2. Doug Valentine on at 4:17 pm

    Hi Brandon,

    Thanks for all the information you have provided us subscribers during these confusing times! Just wanted to let you know that I am an S-corp with two owners (myself and my wife both doctors). The bank did not allow the owners retirement plan contribution share above the $100,000 payroll cap. Best I can tell is that they did allow the health insurance premiums for owners though. According to the bank this was an action done by the “underwriter” not the SBA. It ended up reducing the PPP loan amount about $18,000 in my case. No EIDL applied for. Perhaps different banks are interpreting the rules differently.


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