PPP2 certification

Technical topics regarding tax preparation.
#1
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I have clients who want to go after PPP2 that don't meet the necessity certification...but their bankers are telling them they can get it... and who doesn't want "free" money? :-) I'm trying to explain that bankers have an incentive to sign up as many of these loans as possible and that they need to sign the certification clause. However, the clients feel that the banker knows more than I do, since the bank is the one "giving away" the money and who isn't lured by "free" money. And now the clients are expecting me to pull together the necessary information.

Is anyone else coming across this?
 

#2
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I had a client ask me recently if they can take advantage of the recent round 2 lending for their business that had a banner year in 2020. :roll:

I conveyed to the client that round 2 is going to require applicants to demonstrate that they were financially affected by the COVID pandemic, and that the client should read my general e-blast on the matter and ask me if they have questions.

If a client obviously does not meet the requirements but the bank is happy to rubber stamp an application for them and I'm made aware of this, I would send a very clear email of my opinion, and mention ramifications, including civil and criminal penalties, then save that email to file. Then, I would remove myself as much from the process as possible.

Consider disengaging as well if you have knowledge of fraud...
 

#3
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Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.

Is this the language you are talking about? This is the same exact wording as in PPP, PPPD Draw 1 and PPP Draw 2. I am guessing the clients you are talking about are really going after Draw 1.

Did you see the list of business that took the original PPP? The same language applied.

I do think you are going to risk alienating clients if you are making a judgement call on whether they should or should not apply.
 

#4
CrowCPA  
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For Draw 1 loans of less that $2M, borrowers were "deemed" to have made the certification in good faith. Do we know for sure whether or not that applies to Draw 2 loans?
 

#5
zl28  
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So if someone didn't apply for PPP1 and now they want to apply for PPP2, the bank will have them apply for PPP1 to get the money?

someone told me that just happened to them.

seems strange - there are still funds from PPP1 to disburse?
 

#6
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I believe the first (well re-funded) first round of PPP ending with something like 100 billion unused, but this is something different.
If someone did not apply for the first round draw, they can apply now for a first round draw in PPP2.
First round uses the 2483, which DOES NOT require you to show a reduction in gross revenue.
Those that applied and received money already, are entitled to use the 2483-SD, which DOES require you to show a 25% drop in gross receipts, for ANY comparable quarter of 2019 vs 2020.
The letter of the law seems to indicate even if you gross sales year over year were up 100%, but you had a 30% decline in revenue in 3rd quarter because you business was COVID shuttered, you still qualify for second draw.

The whole thing is a mess.

Thankfully everyone that I'm dealing with currently, has legitimate declines in revenue for the second round draw.
 

#7
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BerkshireCPA wrote:
I do think you are going to risk alienating clients if you are making a judgement call on whether they should or should not apply.


This is exactly the problem.

Some are long term clients. I get it from their side - you have two trusted advisors giving you opposite opinions and one is going to give you "free money" (even if that one has an incentive to do so).
 

#8
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ReckedCPAEA wrote:The letter of the law seems to indicate even if you gross sales year over year were up 100%, but you had a 30% decline in revenue in 3rd quarter because you business was COVID shuttered, you still qualify for second draw.




This is exactly what I don't understand. Even if revenues decreased for reasons other than covid in Q3, you still meet the financial requirements.
 

#9
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Telling people to document the circumstances which make the certifications true.

A good faith certification is credible and believable. That’s why we document. Then tell them if they fail on this point the loan may have to be repaid. And that I just leave it to them, let them decide. Don’t have to be a downer.
 


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