PPP Max Loan Amount Calculation For Church

Software. Marketing. Training. Running your business.
#1
Posts:
2
Joined:
11-Oct-2021 3:18pm
Location:
California
I am advising a Church who is in the Forgiveness process for a PPP Loan. The lender Wells Fargo disputes our calculation of the maximum loan amount.

The church's employee, the pastor has opted out of Medicare & Social Security withholding. I am looking for others who have received SBA or lender approval for a PPP Max Loan Amount calculation that adjusts for the Medicare withholding situation.

Here's the case we make to Wells Fargo.

"Sirs, your calculation of maximum loan amount using Total Medicare Wages (Form 941 Line 5c Column 1) follows SBA guidelines. However, those guidelines do not correctly calculate the wages for an employer who has an employee that is not subject to Medicare deduction withholding. It is common and legal practice for clergy to not have social security and medicare withheld. https://www.irs.gov/businesses/small-bu ... the-clergy

Our payroll provider ADP removes this employee's wages from the Total Medicare Wages field (Form 941 Line 5c Column 1) since she does not have Medicare withheld. ADP has confirmed this and we are awaiting a detailed report from ADP showing the exact amount of wages removed from the form 941 each quarter.

Please approve our calculation of PPP Maximum Loan Amount and PPP Forgiveness application."
 

#2
JAD  
Posts:
4022
Joined:
21-Apr-2014 8:58am
Location:
California
I thankfully have not been involved in any of these loan application issues, but just guessing, Wells Fargo is probably just trying to follow the letter of the law, regulations, guidance etc on how it is supposed to calculate the loan forgiveness. There must be liability/penalties if they forgive amounts that are not properly allowed to be forgiven. If I were Wells Fargo, you would have to show me that your interpretation is supported by the instructions on how to calculate loan forgiveness.

The data re who obtained a loan is public info. I think propublica has the information online. Perhaps you could find other churches on the list and contact them to see how they handled this issue. If they were successful in getting the loan forgiven, that might be helpful information for Wells Fargo. Also, you could ask the church what argument they made and adjust your argument accordingly.
 

#3
Posts:
18
Joined:
16-Oct-2021 4:01pm
Location:
Tacoma, WA
For the application I broke the calculation up into three parts: 941 Medicare wages + Ministers income + Ministers housing allowance all separated. Then I provided the explanation on the form "*Ministers have a dual tax status; they are employed by the church for purposes of income tax but self-employed for purposes of SS and Medicare tax. Their income and housing allowance should be included as payroll costs." It was accepted without question by Columbia Bank.

I am going to file for forgiveness this week so I hope to not have any issues with that part.
 

#4
Posts:
2
Joined:
11-Oct-2021 3:18pm
Location:
California
Our initial application and maximum loan amount was accepted by Wells Fargo bank. It was during the forgiveness process that they recalculated our maximum loan amount as equal to our 941 Medicare wages. I agree with your calculation. I have heard from a conference treasurer that some banks got their forgiveness approved only after explaining the above situation to someone in management. We are hoping that will do the trick. I was hoping someone would have a statement from the SBA that supports the above calculation. That would surely get approved by the bank.
 

#5
Posts:
2771
Joined:
22-Apr-2014 1:34pm
Location:
North Carolina
I do know that there is an FAQ that specifically states that housing allowances are allowed for the PPP calculation. Maybe that could be of some help as well.
 


Return to Business Operations and Development



Who is online

Users browsing this forum: Miami88 and 24 guests