Aaron Smyle has an MBA, MST, and is an Enrolled Agent (EA), a federally-authorized tax practitioner who has technical expertise in the field of taxation. Aaron Launched Smyle & associates in 2010 and serves the NYC area with a special emphasis in restaurants, retailers, creative businesses, medical practices, and law firms.
What You’ll Hear On This Episode of Wingnut Social
- [4:57] What is the Flexibility Act?
- [7:51] Natalie got it strictly based on payroll averages
- [10:56] Where do you apply for forgiveness?
- [12:20] How the funds have to be spent has changed
- [14:01] How to make sure you qualify for forgiveness
- [15:47] The revised payment terms of the loan
- [20:20] Other notable changes with the flexibility act
- [23:29] What does the allowance for paying taxes mean?
- [25:00] What records you may need to provide
- [26:25] Connect with Aaron Smyle
- [27:31] What up Wingnut! Round
- [33:34] Blooper Reel!
Connect with Aaron Smyle
Resources & People Mentioned
- Wingnut Social Episode 136: CARES Act
- Paycheck Protection Program Flexibility Act
- SBA New Rules for PPP Loan
- PPP Loan Forgiveness Application (will likely be amended)
How the flexibility act changes the PPP loan terms
If you originally applied for the PPP loan, the terms of forgiveness were hazy and how you could use the money was complicated (Aaron laid out the CARES act and PPP loan in episode 136 if you missed it). Here are the primary changes that have been implemented in the flexibility act:
- Originally you had 8 weeks to bring your payroll up to normal numbers/use the funds. Now, the time has been extended to 24 weeks—if necessary—and will end December 31st, 2020.
- Originally, at least 75% of the loan had to be spent on payroll to be forgiven. The other 25% could be spent on rent, utilities, and interest charges. Now it’s been changed to a 60/40 split—60% minimum on payroll and 40% between rent, utilities, and interest.
- Lastly, if you spent the money in other areas the money would roll into a loan versus being forgiven. The original loan repayment terms were to be over a 2-year period. Now you have 5 years to pay back the loan—at only a 1% interest rate.
Currently, you still have until June 30th to apply for the PPP loan. For some business owners, that date is reaching your original 8 weeks. So if you can’t get your payroll numbers up by then, consider extending to the 24 weeks.
What is the next step for designers?
If you haven’t yet applied for the PPP loan because of the repayment terms, inability to operate your design firm, etc. you still have time to apply. The repayment terms are favorable even if you can’t get your loan forgiven. So if you need the funds, there is still approximately $120 billion left in the program (at the time of recording).
If you’ve applied for and received the loan, you’re probably wondering how to apply for forgiveness. The current application is linked in the resources above. However, Aaron points out that it’s likely to be revised. When banks begin accepting the forgiveness paperwork, you’ll bring the application to the bank you received the loan through.
You’ll need to be prepared with documentation. Aaron recommends reading over the application so you can begin gathering the necessary information, which may include: payroll reports (quarterly and weekly), proof of differences or reductions in pay, canceled checks, bank statements indicating amounts for payroll, canceled rent checks, etc.
For discussion about each of these topics, detailed descriptions from Darla and Natalies’ go-to tax professional, and other need-to-know information, tune in to this important episode of the Wingnut Social podcast!
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