Posted on 03/22/2021 12:17:28 PM PDT by nickcarraway
I believe there was no need for repayment, if you used the loan for the purpose specified. Sounds like maybe she didn’t do that. I would guess that, in this type of business, most of her “employees” were actually independent contractors, not on a payroll, and not receiving benefits.
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>>most of her “employees” were actually independent contractors, not on a payroll, and not receiving benefits.
correct, and because they were independent contractors, they could have - and probably did - apply for their own forgivable loans.
Stupid people borrowing money and signing paperwork they didn’t read and can’t understand - what could possibly go wrong?
I was wondering when this carp would start happening, with these PPP loans.
Hopefully, this lady...with the help of the investigative reporter/reporting....will stop this nonsense, stat.
for sure now the larger institutions who greedily hitched onto the PPE bandwagon will never re-pay one damn dime and most if not all didnt really need it
And.....did she actually pay these contractors the $$? There should be reciepts, for all transactions....maybe the contractors were double paid (by her and their own loans) and may have to pay back.
She should have read the requirements before she applied. She doesn’t have to pay back the money immediately, she can get some pretty decent terms at a low interest rate.
A contractor is not an employee. They were not eligible to get a ‘paycheck’ from her.
They were eligible to apply for a PPP loan of their own or file PUA.
The payback is 5 years at 1% interest. I’m sure she can manage that.
If you don’t know the difference between an employee and a contractor, you probably should not be in business.
She has a 1% return rate through the SBA for this money.
Who didn’t see this coming?.....................
The Government giveth, and the Government taketh away.
More than that, if I remember correctly the loans were based on wages paid and reported on 941s. If she received the loan based on ordinary wages and then chose to flip all her “employees” to “contractors” she probably committed fraud.
Sounds like the people she paid were not payroll employees but independent contractors. Those payments were not specifically carved out by the PPP loan regulations. The regs changed a bit so forgive me if I am off by a bit but I think the final ruling was that 60% had to go to employees and 40% could go to overhead expenses. But the entire loan amount was based on historic payroll, 2.5 times your average monthly payroll, and you needed to provide the payroll quarterly reports with the loan application.
But I am pretty sure they were handling so many volumes of paperwork they were likely to just go through the motions and rubber stamp just about everything - some with the rubber stamp probably didn’t understand the specific clauses either.
If she really did give the money to her workers, they really should forgive the loan even if they were independent contractors. However, that creates another problem if the recipients of the money were also not reporting the income or taking unemployment money on top of the backdoor payments.
In reality this borrower needs to file 1099 reports on payments to contractors. Could raise a red flag for the workers if anyone is looking.
As for the terms of the loan, IIRC it is 1% interest payable over 5 years for whatever portion is unforgiven. So asking for $36,000 back in lump sum does seem a bit unfair. Worst case, $600 a month to pay it back. Hard for many to budget that right now, but not impossible in time.
Small shop owners are typically not the type to know the in and outs of these loans.
We got one for our church, and it worked because a retired group of accountants guarded that money like a a bunch of penny pinching mad men. We even paid some back that we didn’t use.
They were explicitly not employees, so the funds don’t cover them, when coming from her.
They were all self-employed, independent contractors.
Churches don’t pay taxes, and therefore should not have been bailed out with taxpayer funds.
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