This year has been anything but typical as we have seen numerous challenges due to the coronavirus pandemic. One thing, however, remains the same: our dedicated team members. In appreciation for their hard work and dedication–especially those who have been present in the offices each day during this extended “tax season”–we will be closing our HSC offices for the day on October 16th. The offices will re-open at 8:00 a.m. local time on Monday, October 19th.
The FASB on June 3, 2020, published a new accounting standard that grants a one-year delay on leases and revenue recognition accounting rules for a subset of companies, many of which lack resources and are pressed by work constraints brought on by the coronavirus crisis.
The board issued Accounting Standards Update (ASU) No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, to defer two standards: ASU. 2014-09, Revenue from Contracts with Customers (Topic 606), for privately owned companies and nonprofits that have not yet adopted the standard, and ASU No. 2016-12, Leases (Topic 842) for all private companies, private not-for-profit organizations, and public nonprofits that have not yet adopted the rules. The standards are two of the most substantial accounting changes to hit the U.S. marketplace in decades.
Under the deferral, private companies and not-for-profit organizations that qualify can choose to apply Topic 606, Revenue from Contracts with Customers, to annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020.
For leases rules, private companies and private not-for-profit organizations can apply the standard to fiscal years beginning after December 15, 2021, and to interim periods within fiscal years beginning after December 15, 2022. Public not-for-profit organizations that have not yet issued (or made available to issue) financial statements reflecting the adoption of the leases guidance can apply the standard to fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
The date delays are optional. Earlier adoption is allowed.
For more information please contact Greg Elpers, CPA at firstname.lastname@example.org
WASHINGTON – To further meet the needs of U.S. small businesses and non-profits, the U.S. Small Business Administration reopened the Economic Injury Disaster Loan (EIDL) and EIDL Advance program portal to all eligible applicants experiencing economic impacts due to COVID-19 today.
“The SBA is strongly committed to working around the clock, providing dedicated emergency assistance to the small businesses and non-profits that are facing economic disruption due to the COVID-19 impact. With the reopening of the EIDL assistance and EIDL Advance application portal to all new applicants, additional small businesses and non-profits will be able to receive these long-term, low interest loans and emergency grants – reducing the economic impacts for their businesses, employees and communities they support,” said SBA Administrator Jovita Carranza. “Since EIDL assistance due to the pandemic first became available to small businesses located in every state and territory, SBA has worked to provide the greatest amount of emergency economic relief possible. To meet the unprecedented need, the SBA has made numerous improvements to the application and loan closing process, including deploying new technology and automated tools.”
SBA’s EIDL program offers long-term, low interest assistance for a small business or non-profit. These loans can provide vital economic support to help alleviate temporary loss of revenue. EIDL assistance can be used to cover payroll and inventory, pay debt or fund other expenses. Additionally, the EIDL Advance will provide up to $10,000 ($1,000 per employee) of emergency economic relief to businesses that are currently experiencing temporary difficulties, and these emergency grants do not have to be repaid.
SBA’s COVID-19 Economic Injury Disaster Loan (EIDL) and EIDL Advance
- The SBA is offering low interest federal disaster loans for working capital to small businesses and non-profit organizations that are suffering substantial economic injury as a result of COVID-19 in all U.S. states, Washington D.C., and territories.
- These loans may be used to pay debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact, and that are not already covered by a Paycheck Protection Program loan. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
- To keep payments affordable for small businesses, SBA offers loans with long repayment terms, up to a maximum of 30 years. Plus, the first payment is deferred for one year.
- In addition, small businesses and non-profits may request, as part of their loan application, an EIDL Advance of up to $10,000. The EIDL Advance is designed to provide emergency economic relief to businesses that are currently experiencing a temporary loss of revenue.This advance will not have to be repaid, and small businesses may receive an advance even if they are not approved for a loan.
- SBA’s EIDL and EIDL Advance are just one piece of the expanded focus of the federal government’s coordinated response.
- The SBA is also assisting small businesses and non-profits with access to the federal forgivable loan program, the Paycheck Protection Program, which is currently accepting applications until June 30, 2020.
For additional information, please visit the SBA disaster assistance website at SBA.gov/Disaster.
Washington—Today, the U.S. Small Business Administration (SBA), in consultation with the Department of the Treasury, posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application implementing the PPP Flexibility Act of 2020, signed into law by President Trump on June 5, 2020. In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application that applies to borrowers who:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%
The EZ application requires fewer calculations and less documentation for eligible borrowers. Details regarding the applicability of these provisions are available in the instructions to the new EZ application form.
Both applications give borrowers the option of using the original 8-week covered period (if their loan was made before June 5, 2020) or an extended 24-week covered period. These changes will result in a more efficient process and make it easier for businesses to realize full forgiveness of their PPP loan.
For more information, please contact Scott Touro, MBA at email@example.com.
Harding, Shymanski & Company, P.S.C. Offices will close at Noon local time on Fridays starting May 22nd and continuing through the Labor Day holiday.
“Our employees work hard year-round, and especially this year’s busy season has been particularly challenging as we help our clients navigate the changing business landscape due to the coronavirus pandemic,” said Scott Olinger, CEO. “We offer this alternative schedule in acknowledgment of the team’s commitment to serving our clients.”
Regular Friday office hours of 8:00 a.m. to 5:00 p.m. will resume on Friday, September 11th.
On Friday, May 15th, the SBA released the application form and instructions that borrowers should use to apply for forgiveness on their PPP funds they received. Highlights of the form include:
- When the 8 week period begins to count expenses disbursed from the funds to credit towards forgiveness.
- What payroll expenses count towards the eligible expenses.
- How to calculate the full time equivalent (FTE) of employees.
- Inputs for Business mortgage utility payments.
- Inputs for Business rents or lease payments.
- Inputs for Business utility payments.
The form also includes instructions for what documentation will need to be submitted with the application form, in order to support the expenses shown.
It is expected that there will be additional clarification from the SBA as this process continues. HSC will update our clients and friends as this information becomes available. In the meantime, please be sure to contact us with any questions or visit our COVID-19 Resource Center for additional resources.
For more information please contact Scott Touro, MBA at firstname.lastname@example.org.
As the conversation in the United States turns towards re-starting our economy, businesses want to know how they can responsibly reopen their business and protect the health and safety of their employees. At a minimum, businesses need to consider federal and state health guidelines and requirements to limit the spread of COVID-19, including but not limited to:
- How do reintroduce employees back into the workforce in phases?
- What new employee leave policies/procedures do we need to have in place?
- How will we monitor employee health proactively?
- What new cleaning/sanitizing practices do we need to adopt?
- Exactly what will social distancing look like?
- What PPE do we need to protect employees from exposure to COVID-19?
- Do I need a written plan?
The above questions are just a start. As the re-entry begins, you will want to give employees confidence they are protected, and get businesses back to being productive and profitable.
The U.S. Small Business Administration (SBA) issued a new interim final rule 5/13/2020 which allows lenders to increase existing Paycheck Protection Program (PPP) loans to partnerships and seasonal employers. An excerpt from the applicable section is provided below and the full interim final rule may be accessed here:
The ability to increase loans applies to partnerships who submitted their loans prior to April 14th because the guidance issued that date stated that the self-employment income of general active partners was now to be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by, or on behalf of, the partnership. This means that applications from partnerships made prior to April 14th were likely granted loans in amounts less than they would qualify for under the new guidance. Similarly, an interim final rule dated April 28th established an alternative criterion for calculating the maximum loan amount for PPP loans issued to seasonal employers.
The interim final rule issued 5/13/2020 allows all PPP lenders to increase existing PPP loans to partnerships or seasonal employers to include appropriate amounts to cover partner compensation in accordance with the April 14th interim final rule as outlined below.
Question: If a partnership received a PPP loan that did not include any compensation for its partners, can the loan amount be increased to include partner compensation?
Answer: Yes. If a partnership received a PPP loan that only included amounts necessary for payroll costs of the partnership’s employees and other eligible operating expenses, but did not include any amount for partner compensation, the lender may electronically submit a request through SBA’s E-Tran Servicing site to increase the PPP loan amount to include appropriate partner compensation, even if the loan has been fully disbursed, provided that the lender’s first SBA Form 1502 report to SBA on the PPP loan has not been submitted.
After the initial SBA Form 1502 report on the PPP loan has been submitted to SBA, or after the date the first SBA Form 1502 was required to be submitted to SBA, the loan cannot be increased. In no event can the increased loan amount exceed the maximum loan amount allowed under the PPP Program, which is $10 million for an individual borrower or $20 million for a corporate group. Additionally, the borrower must provide the lender with required documentation to support the calculation of the increase.
The interim final rule posted on April 14, 2020, describes how partnerships, rather than individual partners are eligible for a PPP loan. The interim final rule further explained that the self-employment income of general active partners could be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership. Guidance describing how to calculate partnership PPP loan amounts and defining the self-employment income of partners was posted on April 24, 2020.
Please contact Scott Touro, MBA at email@example.com with any questions.