I don’t understand your question about the EIDL… sorry.

But the general answer about everything else in your message is, “Don’t worry.” With the PPP flexibility act, you get forgiveness for payroll costs, utilities, rent and interest you spend in the 24 weeks that starts on May 5th. You do face some limitations. For the owner, your 2019 compensation of $4800 limits the owner “payroll” you can count in the 24 weeks. And you need to spend at least 60% of your PPP loan on payroll to get 100% forgiveness. But you should be able to do that. (Your PPP loan equaled 10 weeks of payroll basically… and now they let you look at 24 weeks of payroll.)

1. Is my understanding correct in that you can’t use both loans for the same expense at all or is the rule you can’t use it for the same expense for same time period? Example is 85 percent of my PPP so far been used for payroll. My 8 week period ends June 30th. If I don’t use the EIDL funds until the July 15th payroll would that be in compliance of the statue or should the money not be used at all for any payroll expense since money from the PPP was.

2. To clarify with the new PPP flexibility program, I can only get up to 60% forgiveness for payroll? I have already spent 85% on payroll and 5% on rent from my May 5th PPP loan. My bank told me originally when I did loan application that if I spent 90% on payroll and 10% on rent that would qualify for forgiveness rules. I’ve basically already done that and can’t change the payroll now.

3. I can only spend roughly $4800 on my employee owner compensation since I had a low income in 2019. However my pay checks for May totaled $8000 in salary. Would I be in compliance if I had Paychex void out $4000 in income and put the money back in the PPP account since my 56 day period is not over until June 30th?

Thank you

Your approach does work…

But there’s basically a new way to avoid a reduction in forgiveness due to a reduction in pay rates as described here: http://evergreensmallbusiness.com/paycheck-protection-program-loan-forgiveness-application-tips-tricks-and-traps/ … See the paragraphs under the heading “A New Safe Harbor…”

And then also see the discussion here about Gotcha #4: http://evergreensmallbusiness.com/losing-ppp-loan-forgiveness/ That should provide another way to not lose forgiveness due to a reduction in pay rates.

All that said, keep in mind that if you reduce wages, you may not have enough payroll… though with the new 24 week “window” that would seem an unlikely outcome.

So I think your example owner can count $15,385 as payroll costs regardless of whether you’re using 8 weeks or 24 weeks.

I.e., I don’t think the PPP flexibility act changes the 8/52nd fraction to 24/52nd. (We’ll learn the right fraction at some point when the SBA issues more guidance.)

I think you can include healthcare and retirement in addition to the $15.385…

I think the owner still only gets $15,385 of replacement income, which is $1923 a week.

So mathematically, you could get to $15,385 the last eight weeks of the 24 week window by paying $1923 a week. And then if you can get unemployment insurance the first 16 weeks–and I don’t know the rules for that–what you propose would work.

I’d like to rephrase that for clarification purposes. A Self employed single owner no employees is awarded PUA (with some retroactive payment), and maybe that doesn’t matter to the question.

Does the self-employed have to start paying (Rehire) themselves with the PPP as soon as it is funded? Can they wait, now that there appears to be 24-weeks, to rehire and spend PPP funds paying themselves, and take advantage of the additional weekly unemployment benefits through the July PUA benefit deadline ?

Which is greater then the max $15385 that owner can make

Is this correct ?

So if you only include salaries and don’t include health insurance or pension then can you still deduct health cost and pension of your taxes if file as s Corp?

I think you can wait… but I should say that some accountants think you can pay owners more than eight weeks of “payroll” (so more than 8/52nds of your 2019 self-employment income). That possibility might play into what’s optimal in your situation.

BTW, the 8/52nds limit thing? And the possibility it’ll change to 24/52nds? We’ll need to get more guidance from the SBA to know what’s what…

Yes, I think you can. I.e., you have a roughly 6 month window to spend money on payroll, utilities, interest, etc.,