Business owners may be eligible to request an increase to already-distributed PPP1 Loan
With the recent changes to the first distribution of the Paycheck Protection Program (PPP1) rules, the following situations may allow for PPP1 recipients to be eligible for an increase to the amount they originally received:
- EIDL Grant Reduced PPP1 Forgiveness – if the applicant’s PPP1 forgiveness amount was reduced due to the receipt of an Economic Injury Disaster Grant (EIDL). The new rules eliminates the reduction of an applicant’s PPP1 loan for the amount of the EIDL they received (up to $10,000)
- Partner Compensation Was Not Included – the initial rules were not clear that partner compensation could be included in the calculation of PPP1. This rule has been clarified and partner self-employment income is eligible and includable in the PPP1 loan calculation.
- Expanded Definition of “Payroll Costs” – the new rules have expanded the costs that can be included in the PPP1 calculation to include group life, disability and dental insurance. These cost may be significant for some applicants to obtain additional funds.
- Error Calculating Eligible Loan Amount – If an applicant discovers an error in the calculating the eligible loan amount.
DEADLINE: The deadline to request an change to the PPP1 amount originally received is March 31, 2021. You can request a change even if the original loan has already been applied for or has been forgiven, as long as requested by March 31, 2021. There is a limited amount of money allocated to the PPP1 fund, so timing of your request is important.
HOW TO APPLY:
- NO application is required. The applicant does NOT file another application.
- The applicant should contact their lender to request a change and provide any requested documentation to support the change.
- Once the lender approves the change, the lender (not the applicant) must complete the SBA Form 1502 and submit it via the E-Tran system by March 31, 2021 (so be sure to allow enough time for them to submit it before then).
- Once submitted, the funds should be released within 10 business days (as long as funds are still available).
NOTE: If an eligible business has not yet applied for PPP1, they can still apply by March 31, 2021. If the business is also eligible for the second PPP draw (PPP2), the PPP1 application should be submitted as soon as possible so that the PPP2 application can also be submitted by the March 31st due date. For assistance with this or any other PPP loan program questions, contact a ShindelRock tax professional.