Disclaimer: This information was correct at the time of publication; however, new guidance from government agencies may be issued at any time, causing some or all of this information to change. Please visit our COVID-19 Business Strategy Hub for the latest news and ensure you are subscribed here to receive email alerts as they are released. We are working diligently to provide the most current information as it becomes available under our COVID-19 Actionable Insights For Businesses Series.
On May 13, 2020, the SBA issued additional guidance through an Interim Final Rule allowing banks to make an additional PPP loan disbursement to partnerships that did not include partner compensation in their original PPP loan application.
Please read our latest blog regarding the updated guidance: Alert: SBA Allows Partnerships to Increase PPP Loans for Partner Compensation
One of the more debated topics in the newly established Paycheck Protection Program (PPP) is the treatment of partner compensation, whether in the form of guaranteed payments or distributions. While the CARES Act statute indicated that partners, in their capacity as self-employed individuals, should file for loans individually, this is no longer the case. On April 14, 2020, the SBA issued long sought after guidance on this issue.
According to the latest SBA guidance, if you are a partner in a partnership, you may not submit a separate PPP loan application for yourself as a self-employed individual. Instead, you should report your self-employment income as a payroll cost, up to $100,000 annualized, on your PPP loan application filed by or on behalf of the partnership.
If you are a partnership and have already submitted your loan application, you should immediately call your bank and ask to have your application amended to include partners in the total payroll cost calculation. The SBA has not issued guidance for loans that have already been processed and approved.
As things continue to change very quickly, we encourage you to subscribe to our alerts here so you can stay informed and take action as needed.
If you need help with your 7(a) loan, the Moore Colson team can assist with the following:
- Calculating the 7(a) loan amount
- Helping your business apply for the 7(a) loan
- Calculating the forgiveness amount
- Assisting with the forgiveness application
- Helping with short and long-term cash flow projections
- Helping calculate the credits under FFCRA and CARES Act
For more information on the 7(a)/PPP loans, refer to our previous blogs:
- April 3, 2020 | Alert: SBA Releases New Details on 7(a) Loans – What You Need to Know
- April 1, 2020 | Urgent Action Needed: Banks begin taking SBA 7(a) loan applications on 4/3/2020
- April 1, 2020 | CARES Act Paycheck Protection Program 7(a) Loans – What You Need to Know
Bert Mills, CPA, is the Managing Partner at Moore Colson. In his role, Bert sets the vision and mission of the Firm and works closely with the Firm’s leadership to drive and implement strategies.
Andy Starnes, CPA, is a Partner and Tax Services Practice Leader Moore Colson. Andy’s specialties include corporate tax compliance and planning, business consulting, and multi-generational planning with a focus on the construction, professional services and staffing industries.
Steven Murphy, CPA, is a Partner in Moore Colson’s Tax Services Practice. He is the Practice Leader for the Transportation Industry and also serves as the Tax Practice Leader for the Retail Industry. Steven has over 20 years of experience leading tax engagements and implementing tax strategies.