HSC CORONAVIRUS C
OMMUNICATION
Edition #37
March 19, 2021
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HSC COVID-19 Fast Response Team
We are here to help!
In these uncertain times with multimedia channels reporting conflicting and sometimes incorrect information, our firm is working to add clarity to this situation by providing new and verified information as it becomes available to us. We have also set up a
Coronavirus Resource Center on our website for ongoing information.
In addition, we have created the HSC COVID-19 Fast Response Team to serve our clients in addressing the difficult decisions they are being faced with on a daily basis. This dedicated multi-disciplinary team consists of our tax, payroll, HR, capital markets and accounting professionals.
If you have questions or would like to speak with this team, please contact your HSC team member or
Kyle Wininger,
CPA, CICA, CVA, CFE at
kwininger@hsccpa.com.
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What We Know About the Restaurant Revitalization Fund
The American Rescue Plan Act of 2021 contains $28.6 billion in nontaxable grants for businesses in the restaurant or restaurant related industry
(see full list of eligible entities here). The program, which does not yet have an operational date, may provide the relief many food or beverage providing businesses need to both recover from the 2020 impact of the COVID-19 pandemic and to make it through the next few months as states fully reopen and vaccine distribution continues to increase.
Industry groups are reporting a potential May/June 2021 operational date for the Restaurant Relief Fund.
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New PPP Borrowers with Schedule C Loan Requests Now Able to Use Gross Income Line 7 for Owner’s
Compensation Replacement
To further assist small business owners whose businesses have been particularly impacted from COVID-19, the Biden administration made a significant change to the owner’s compensation replacement calculation for Schedule C PPP borrowers.
As a result, the SBA, in consultation with Treasury, has determined that a Schedule C filer may elect to calculate the owner compensation share of its payroll costs—that is, the share of its payroll costs that represents compensation of the owner—based on either (i) net profit or (ii) gross income, as calculated under the rule below. Gross income is the amount the borrower reports on line 7 of Schedule C. If a Schedule C filer has no employees, the borrower may elect simply to calculate its loan amount based on either net profit or gross income. If a Schedule C filer has employees, the borrower may elect to calculate the owner compensation share of its payroll costs based on either (i) net profit or (ii) gross income minus expenses reported on lines 14 (employee benefit programs), 19 (pension and profit-sharing plans), and 26 (wages (less employment credits)) of IRS Form 1040, Schedule C.
This rule applies for both PPP1 and PPP 2nd draw requests but is not retroactive and is only for new loans that have not already been processed by the SBA. Borrowers are not able to go back and amend previously funded PPP loans.
The complete Interim Final Rule can be found here.
The new application for Schedule C borrowers first draw can be found here.
The new application for Schedule C borrowers second draw can be found here.
For more information please contact, Scott Touro, MBA at
stouro@hsccpa.com
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Second Draw Paycheck Protection Program –
Necessity Certification Update
The PPP FAQs document has been updated by the SBA to reflect changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act enacted on December 27, 2020. The FAQs are in the process of being revised to reflect changes made by the Interim Final Rule on Revisions to Loan Amount Calculation and Eligibility posted on SBA’s website on March 3, 2021.
There is a significant change noted in FAQ46 regarding good faith certification. For Second Draw PPP Loans, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
Because Second Draw PPP Loan borrowers must demonstrate that they have had a 25% reduction in gross revenues, all Second Draw PPP Loan borrowers will be deemed to have made the required certification concerning the necessity of the loan in good faith. The loan amounts received by borrowers for First Draw PPP Loans and Second Draw PPP Loans will not be aggregated.
This FAQ would indicate that while PPP 2nd draw borrowers must still attest and certify on the loan application that the current uncertainty makes the loan necessary, that the fact that revenues have declined by at least 25% means that they have been deemed to have met this good faith certification. It also clarifies that if the 2nd draw puts the borrower over the $2 million threshold in aggregate, this does not trigger the necessity questionnaire and mandatory audit threshold previously outlined for PPP1. PPP1 and PPP 2nd draw are considered separately.
The fully updated FAQ can be found here.
For more information, contact Scott Touro, MBA at
stouro@hsccpa.com.
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Harding, Shymanski & Company, P.S.C. is a public accounting firm with offices in Evansville, Indiana, and Louisville, Kentucky. We are one of the largest accounting firms in Southern Indiana and Kentucky, providing experienced professionals who look beyond the numbers to the heart of complex issues. Our clients range in size from small proprietorships to billion-dollar corporations, from closely-held and family-owned businesses to publicly traded firms, and span nearly every industry. They all have one thing in common: they count on our expertise to capitalize on their opportunities and make the best of their challenges.
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Evansville Office
21 SE Third Street
Suite 500
Evansville, IN 47708
(812) 464-9161
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Louisville Office
545 S Third Street
Suite 102
Louisville, KY 40202
(502) 584-4142
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As a reminder, you are receiving this email because you are a valued client of Harding, Shymanski & Company, P.S.C. For more information on our company, please
visit our website.
Harding, Shymanski & Company, P.S.C
Office locations
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