They Should Pay Their Gallery Rent And Utilities And Claim Them For Ppp Forgiveness
Our reasoning: business-related rent and utilities are approved forgivable expenses of the PPP.
Tahani and Kamilah should continue paying their rent and utility bills as usual, and keep records so they can claim a portion of those expenses for forgiveness, using the remaining 25% of their PPP loan.
Tahani will not be able to claim the mortgage interest on her home as a forgivable expense, even though sheâs performing business activities there now. For forgiveness, the PPP requires that you claimed the deduction in 2019.
How Long Does Unemployment Insurance Last
Most states pay benefits for 26 weeks about six months. That varies, however, depending on where you reside.
The CARES Act extended those state payouts by 13 weeks. The latest economic aid legislation approved in December adds 11 weeks, bringing it to a total of 24 additional weeks.
Now anyone receiving either traditional state benefits or Pandemic Unemployment Assistance can receive jobless checks for up to 50 weeks.
In order to receive unemployment insurance, you must prove that you’re actively seeking work. Different states have different requirements for how often you must do this, and for what counts as active job seeking.
The Department of Labor lists all 50 states’ unemployment insurances offices with phone numbers and links to informational websites.
My Business Just Received A Ppp Loan Some Of My Employees Are Refusing To Return To Work Is It Legal For My Employees To Continue To Collect Unemployment When I Have Offered Them Their Jobs Back
Under current law, employees that demonstrate that they left work due to urgent, compelling, and necessitous circumstances are eligible for unemployment insurance benefits. Such determinations are driven by the facts of the individual case. If circumstances have not changed for the employee, such as lack of childcare or being at high-risk for severe complications from COVID-19, they likely remain eligible for pandemic unemployment assistance benefits. If there is not a scenario under the CARES Act that affects an employees ability to return to work and an employee rejects an offer of suitable reemployment, the employee may find him/herself ineligible to continue receiving unemployment benefits. Employers are urged to discuss this with employees so they fully understand the risks of refusing reemployment.
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Is My Ppp Loan Forgiveness Amount Reduced If Employees Refuse My Offer To Rehire Them
Reductions in headcount of full-time equivalent employees and reductions in the salary or wages of an employee may result in a reduction in the amount of loan forgiveness. However, in its rules concerning PPP loan forgiveness, the US Small Business Administration has confirmed it will exclude laid-off employees whom the borrower offered to rehire from the loan forgiveness reduction calculation. All rehire offers must be made in good faith, in writing. Additionally, any employees rejection of a re-hire offer must be documented by the PPP loan borrower. This written documentation is a requirement for exempting such lay-offs from the loan forgiveness calculation.
The Three Relief Programs
PPP: Paycheck Protection Programâ5-year low-interest, forgivable loan primarily for payroll.
EIDL: Economic Injury Disaster LoanâLong-term low-interest loan for sustaining operations.
PUA: Pandemic Unemployment AssistanceâExpansion of unemployment benefits that includes independent contractors.
They Should Pay For Their Art Supplies The Contractor And Other Working Capital With The Eidl
Our reasoning: The EIDL is designed for working capital use.
Tahani and Kamilah are allowed to use the EIDL to pay their contractor. Since thereâs not much demand for new art right now, theyâve asked the contractor to help them revamp their website to strengthen their web presence. They can use EIDL funds for general working capital.
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What Loan Amount Is Available To Sole Proprietors Independent Contractors And Freelancers Through The Sba Paycheck Protection Program
The PPP program looks at the history of payments to your workers during various periods specified under the CARES Act. Typically, for businesses with a substantial history of payroll, the relevant period is the calendar year 2019. For businesses without a standard 2019 payroll, the SBA has specified alternative timeframes that can be used to calculate average weekly payroll . The amount of the PPP loan is determined by calculating the average monthly payroll during the relevant period. Payments to workers exceeding $100,000 have to be excluded from the calculation of average monthly payroll, as do other payments under federal employment laws, although state unemployment taxes can be included.
The PPP permits loans up to 2.5x the average monthly payroll during the relevant period. The maximum loan amount is $10 million.
Can You Get Both Unemployment And The Ppp
You can take advantage of both unemployment benefits through the PUA and funding through the Paycheck Protection Program, but not at the same time. As the PPPs name implies, the program was designed to keep workers employed. If you receive a PPP loan, you will need to report the money you receive from the PPP as income to your states unemployment agency. That will likely render you ineligible for unemployment. Once you spend your PPP, you could go back on unemployment if your business still isnt open.
Unlike the PPP, you can combine the EIDL grant with unemployment, as long as you dont use the grant to pay yourself.
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Ppp Eidl Or Unemployment You Can Do All 3
Please check the PPP and EIDL program SBA pages for current availability of funds. As of May 5th 12:30 p.m. MST, PPP loans are available. EIDL loans for general small businesses have not been available since but are now available only to agriculture businesses.
Professional coaches, writers, and consultants as well as each of their small business clients are likely to be eligible to receive PPP loans , EIDL loans and/or Unemployment benefits if their income has been impacted by the pandemic.
Potential reasons for needing these may be as direct loss of income from clients, cancelled speaking engagements at conferences, the need to stay at home for home-schooled children or for any number of other reasons. Some applications may ask for specific reasons, but most dont and instead ask you to check a box stating that you certify that you are being adversely financially impacted by the pandemic.
EIDL loans are applied for on the Small Business Administration website. The amount is up to $10k but is essentially $1k per employee. It can be used for expenses not covered by the PPP or for a different time period.
Each person can use all 3 of these of these programs, they just cannot use them concurrently for the same purpose.
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Unemployment Benefits And The Cares Act
Before the federal CARES Act was enacted, a W-2 employee in Illinois was entitled to 26 weeks of benefits after losing their job. The CARES Act lengthened the period that an eligible worker can obtain benefits from 26 to 39 weeks. It also provided an additional $600 in weekly benefits for those receiving regular unemployment benefits, and provided an additional 13 weeks of unemployment benefits for those who had previously exhausted their unemployment benefits.
The Pandemic Unemployment Assistance portion of the CARES Act recognizes the plight of laid off workers who are not employees, and provides certain benefits through the unemployment compensation system.
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Covered Period For Round 3 Ppp
Round 1 and Round 2 PPP loans stipulated that the time during which you had to use your loan proceeds would be an eight-week period beginning on the date you received your loan proceeds. That was later expanded to 24 weeks.
Round 3 allowed you to choose any length period between eight weeks and 24 weeks, giving you more control over how to handle reductions in your workforce, if needed, once PPP funds are depleted.
How Do I Get Pua Payments
The recent stimulus legislation adjusted how people can receive benefits from PUA. Previously, you only had to self-certify to receive the benefit. Now, there may be some paperwork involved.
New PUA applicants who apply on or after January 31 must submit any wage records within 21 days unless they can prove they had good cause to miss the deadline.
Current PUA beneficiaries who are enrolled in the program will have 90 days to submit any available record or proof of unemployment to continue receiving benefits.
Evermore suggested keeping handy any past employer correspondence, proof of income, or job record from before the pandemic.
“It’s not clear what form it will still take,” she said. “You could possibly show a bank statement that includes regular deposits, but get any form of documentation ready. We don’t know what state agencies are gonna say.”
The latest relief package includes a provision to ensure people aren’t kicked off unemployment insurance solely because they were unable to provide any documentation. Retroactive payments for PUA only go back to December 1.
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Do You Provide Health Insurance Coverage
If you provide health insurance coverage for your employees, the PPP includes health insurance costs in the calculation of the loan. Keeping employees on payroll will let them keep their health insurance benefitsâsomething that is critical during a global health crisis.
If you lay your employees off so they can collect unemployment, theyâll be on the hook for finding and paying for their own health care coverage.
Can I Pay My Employees Under The Paycheck Protection Program While They Are Also Collecting Unemployment Insurance
Possibly, depending on the amount that the employee receives from you and other sources. A worker must report any wages earned during a week to the Department of Unemployment Assistance , which may or may not affect their eligibility for benefits. If the amount of such wages or other income exceeds 1.3 times the weekly unemployment benefit amount, the employee will not receive any UI benefits for that week. Employees may qualify for partial UI benefits depending on total income received in a given week.
Bear in mind, however, that if you pay an employee less than 60% of the wages or salary that you paid the employee during the most recent full quarter in which the employee was employed before you received the PPP loan, your loan forgiveness amount may be reduced.
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So What Do You Recommend
It is possible that Congress or the federal Department of Labor will address this issue through amendment or waivers. In the meantime, we recommend that you apply for benefits through IDES, include all your sources of work-related income, including 1099 work. You should receive benefits based on your W-2 work, as well as the additional $600 in weekly benefits provided by the CARES Act. You should then file an appeal with IDES within 30 days of the benefit determination, arguing that you’re entitled to additional benefits based on your 1099 work. Two of our fellow Chicago legal services organizations, CARPLS and Legal Aid Chicago, can assist you with the appeals process.
Can You Get The Ppp And Unemployment
Nearly 900,000 people filed for unemployment last week, as the U.S. jobs market continues to struggle. Self-employed people and independent contractors are currently eligible for unemployment under the Pandemic Unemployment Assistance program, but as many business owners prepare to apply for the Paycheck Protection Program , which is opening for many lenders on Tuesday, you may be wondering whether unemployment and the PPP can be combined. Heres what you need to know, based on our current understanding of SBA guidance .
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How Do The Ppp And Eidl Overlap
You can apply for and use the PPP and EIDL loans at the same timeâyou just canât use them for the same purpose.
If you received the EIDL between January 31 and April 3, 2020, you were able to refinance the EIDL loan into the PPP loan. This option worked best for those who were planning on using the EIDL funds for payroll, because the refinancing meant that the loan could be forgiven.
Most businesses will not have had the option of refinancing the EIDL into the PPP. In this case, the two loans will remain separate, however you cannot use the loans to cover the same expenses when you have both of them. For example, if you still have PPP funds remaining, you cannot use the EIDL for payroll. But once youâve used up your PPP funds, using the EIDL for payroll will be permissible. For example, if you used PPP funds for June payroll, youâll have to use EIDL funds for a different payroll period or for other approved working capital uses.
Can You Use Help Paying Rent And Utility Bills
If you have rent and utility bills to pay, the PPP allows you to use a portion of the money you receive to pay for those costs. So not only do you get funds to pay employees for 24 weeks, you can get money to pay for some of your other expenses.
If you choose to lay off employees instead of using the PPP, you wonât get that extra money to help you pay those bills.
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Unemployment Compensation Eligibility Issues
Each states unemployment compensation office is solely responsible for determining any individuals eligibility for unemployment compensation benefits. It is not an employees decision to stay on unemployment compensation. Employees who have been laid off or had hours reduced are required to certify any hours they worked and income they received every single week. Employers get weekly forms from their states unemployment compensation office to verify wages paid. Employers can state that there is work available and report if an employee refused to return to work. The fundamental basis of unemployment compensation eligibility is that the employee is unemployed due to no fault of their own and they are available to work.
Where this gets very sticky is when employees are fearful of returning to work because of concern about COVID-19. Fear alone is not necessarily a valid reason for employees to qualify for unemployment compensation benefits, but again, it is not the employers decision on eligibility, any more than it is an employees decision. Just because employees would prefer to be on unemployment compensation does not mean they eligible. The guiding principle for employers should be truthfulness when completing their weekly unemployment compensation benefits forms for each employee who has filed.
Do You Need Help With Other Expenses
The PPP can be used to cover some other expenses for your business besides paying yourself and employees, like rent and utilities. If you need help with these expenses, the PPP is a better option for you than unemployment. 60% of the PPP must be used toward payroll for it to be forgiven, but the other 40% can be used for rent, utilities, health insurance for employers and employees, business expenses, operating costs and property damages.
You can learn more about the latest PPP news, lenders and distribution with the Skip App, which you can download at TrackPPPLoan.com. We will even have partner lenders right on the app starting next week.
Disclaimer: This is for illustrational purposes only and not to be construed as tax, accounting, or legal advice. Work with your lender further if you have questions.
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Will You Still Have Any Work To Do
For some sole proprietors, business may be down but not completely gone. If you still have some work coming in and you have the ability to earn some income over the next few months, getting the PPP would be a better option. The amount you receive from the PPP wonât be impacted by working and earning incomeâyouâll still be able to receive 2.5 times your monthly payroll cost.
But if you are receiving unemployment benefits and are still partially working, your benefits may be reduced. Check the rules with your state agency to see how much your unemployment check would be reduced if you continue to do some work.
What Unemployment Benefits Are Available To Sole Proprietors Independent Contractors And Freelancers
PUA provides up to 39 weeks of benefits to workers, including SPs, ICs and freelancers that were not previously eligible for unemployment benefits. Benefit payments under PUA are retroactive, providing benefits for weeks of unemployment, partial employment, or inability to work due to COVID-19 reasons starting on or after January 27, 2020, and continuing until December 31, 2020.
The calculation of benefits requires a calculation of the weekly base benefit by reference to the two highest pay quarters during the four quarters preceding the application. The earnings during those two highest quarters are added together, and the sum is multiplied by 47%. Finally, that product is divided by 26 to yield a weekly payment.
To take an example, Worker A earned $13,000 , $12,000 , $11,000 , and $13,000 during the four quarters before filing for unemployment benefits. The two highest quarters are Q1 and Q4, during which Worker A brought home $13,000 , and so they are used to calculate the base benefit, using this calculation:
- Add Q1 earnings + Q4 earnings: $13,000 +$13,000 = $26,000.
- Next: 47% x $26,000 = $12,220
- Finally, $12,220 ÷ 26 = $470
Worker A would be entitled to the weekly base benefit of $470.
The maximum weekly base benefits are as follows: $484 for individuals, $577 for an individual with a spouse they support, and $669 for an individual and child.