Who you gonna blame?

[chiknbut]

https://www.washingtonpost.com/business ... companies/

For those who don't want to pay to read that article, the same thing is posted for free in another thread - just look for the Glenn Beck video on Agenda 21.

[japhy]

The PPP loan forgiveness picture is becoming more clear. The rules were still somewhat murky but as banks understand things they are giving their preferred customers insights into how to make sure you get to keep the money (in their bank).

You can calculate the payroll two ways now. It was originally set up so that it paid for salary up to a cap of $100K. But there was a twist and it now can cover salaries over that amount if you use a shorter coverage period than the original 2.5 months. You can calculate it both ways and see which covers more. You can better your chances of "forgiveness" if you can show the money paid for employees salaries and not rent we have been told, even if rent was originally figured into the PPP loan request amount. Shorter payout period and now including the higher salaries (think partners/stockholders) can help your chances of forgiveness. In the meantime income has only dropped about 8%, so revenue stream keeps flowing. Because there are no salaries to pay out of the revenue during the 2.5 month period, a significant cash reserve is built up. Expenses are cut significantly because no one is going out to lunch or dinner and drinks with clients or travel. My client lunches consisted of meeting up at Sonic and parking next to each other and talking through the opened windows of our respective trucks.

With revenue down and profits steady at a reduced but acceptable 15%, we have no worries. We can cut the dead wood out now if we want to boost profits and increase utilization rates, or hold onto people to have a strategic advantage over smaller firms when the economy comes back next year. As the economy grows it is harder to find good people and being able to have people on staff to throw at the work is an advantage. Plus, people you hold onto during a downturn tend to be more loyal when things turn upwards.

We will file for forgiveness of the loan in October. We have been told not to expect a response until January. Remember there was no means testing when these loans were given out. It was an “emergency” and everyone who qualified was encouraged to apply, and especially if you were a good client of a big bank. The banks would loan us this same amount, we have an established line of credit. But we would definitely have to pay that back. In January we will have already paid out dividends for 2020, which will be lower due to a projected drop in profits and the need to hold onto reserves. But we will be sitting on a pile of cash because our expenses were covered for 2nd Q 2020 by the taxpayers and we might have to pay back our "loan". There will likely be a sizable dividend distribution in January or February when "loans are forgiven" which could exceed the dividends at end of year 2020.

Christmas may come early for stockholders next year!

So let's recap.

The $600 payout to unemployed workers and $1200 stimulus money, is socialism at it's worst. Free money that just kept food on someone's table and people in their homes/apartments. Someone is going to have to pay this back in the future because it ballooned our national debt and fiscal conservatives hate deficits.

The payroll tax cut is a deferral, a loan you have to pay back next year. Bootstrap socialism, a little helping hand for the average Joe who is happy to pay back the loan of his own money back to himself.

The PPP loans are likely to produce a 6 figure dividend for stockholders after the first of the year, crony capitalism (socialism?) at it's finest. Don't forget that taxes have been significantly cut on dividends so we get to keep more of the hard earned dividends now. Someone will pick up the tab for this expense in taxes but you can bet it won't be the ones who got the dividend checks.

Expect the sales of luxury goods/cars and second/third homes to uptick in the 1st Q of 2021. But do not despair, everyone will get a little something in the trickle down.

Enjoy the K shaped recovery and remember....vote Republican like my tax cuts depend on it!

[chiknbut]

This is contrary to Walrus/Lobby's guarantee that the housing market will crash in 2021.

I'm sure he will revise his estimate to later in the year...possibly 2022.

[japhy]

So there seems to be a changing of the guard in the SBA. We are stilling waiting notification on our PPP loan. I don't see anything written in the media about how this is proceeding but we are hearing about it from our bankers and their industry network.

Back in December we were being told that all of the loans would be "forgiven" in January. Now here we are in April and still no word on how this will be handled. Having read the forgiveness application (SBA Form 3508) one thing always struck me as odd. There is no means testing, in other words, you are asked if you spent the money on salaries; but there was no methodology to test whether or not you would have let anyone go if you didn't get the money. No where does it test to see that you needed the money to stay afloat or at full staffing. There is no annual revenue/profit information requested on the forgiveness form.

Take an imaginary firm #1A with revenue of $25M, if they had a profit at end of year 2020 of $500K and a PPP loan of $2.6M, then it would be a good assumption they might have cut staff if they didn't have the PPP loan. If the same company firm #1B generated profits of $3M over the course of the year, you likely were going to keep everyone and never actually need the PPP Loan.

So how is the PPP money accounted for in taxes? The annual profit is calculated without the PPP Loan included. It was a loan, not income. So in firm #1A and end of year there is excess capital of $500K in bank and in firm #1B there is excess capital at the end of year of $5.6M sitting in the bank in simplified terms.

So in firm #1B the $3M was taxed and paid out as dividends to stockholders/employee bonuses and the $2.6M is sitting in the bank waiting to become either more dividends, it is in essence a tax free cash profit, or it gets paid back to SBA.

We are now being told the PPP loans are coming under more scrutiny and may have to be paid back. Of course if you are sitting on $2.6M cash in the bank no biggie, but if you only had $500K in the bank at end of year it might be a bigger deal for cash flow and you may start cutting staff. But at this point the SBA has no data that allows them to differentiate between the two conditions as no means testing was built into the program.

Damn you Democrat socialists!

Some of us Capitalists had plans for our free boondoggle money.

So what if our stimulus money was going to be 100X what Joe Lunchbucket got, we deserve it damn it!

[defixione]

My CPA told me the loans would be forgiven. He also said the money could be spent on other corporate substructure like rent on buildings, communications, etc. My corp 'lost' money last year and my CPA has already set an appointment for me to fill out the application for forgiveness. He'll then submit a new application for funds from PPP2.

[japhy]

We submitted for forgiveness back in October or November. I believe we have been asked for additional information once since then.

Oddly enough this showed up in my email this afternoon.

https://www.bizjournals.com/kansascity/ ... llion.html

[japhy]

My CPA told me the loans would be forgiven. He also said the money could be spent on other corporate substructure like rent on buildings, communications, etc. My corp 'lost' money last year and my CPA has already set an appointment for me to fill out the application for forgiveness. He'll then submit a new application for funds from PPP2.

While all of the other expenses were permissible as part of the application as a loan request, I believe the forgiveness amount is weighted towards payroll expenses. We were told by our bank to apply for only payroll expenses, and to maximize our payroll amount covered. We could use the money for other expenses if needed. But the amount justifiable as payroll expenses was the amount that is most likely to be forgiven. The other expenses might not be.

[japhy]

Well someone finally got around to figuring out where all the money went. I am shocked....ShOckeD I tell you!

So while the Right is scapegoating the people getting $1200 checks for the current hiring issues and inflation; about $600B flowed into the bank accounts of the much maligned, hard working, self supporting but am OK if you wanna give me some more, top 1%. They had to wait a year for the loans to be forgiven and it was not a sure thing. By my estimate about 4,000,000 millionaires got an average of $150,000 out of this deal. Not enough to retire on, but it is an upgrade from "Pass Go and Collect $200". The great recession gave the needle on financial inequality a pretty good shove. The pandemic may be an even bigger move when it is all said and done. While the pundits rage about which side is more to blame, upward mobility is slipping away.

What was it Jay Gould said about paying half the working class to kill the other half? Rupert and the Right and the Rubes are putting that theory to the test.

https://www.marketwatch.com/story/up-to ... eid=yhoof2

https://www.nber.org/papers/w29669?utm_ ... rce=ntwg24

You know what would cause some of this to trickle down to the bottom 99%?

A tax break for the wealthy, no seriously, this time it will work!

But corporations didn't have to pay taxes on that PPP cash, isn't that enough?

Fine point, but the individuals will have to pay some taxes on it when they get their dividends. Do you know how sad it is to write a check to the IRS for more money than the average worker makes in a year? It makes people very, very, sad.

Do you want to take away some of the joy of getting a $150K windfall, do you Scrooge?

[MICHHAWK]

i blame uncle joe. he is sitting in the big chair. the buck stops at the big chair.

[KUTradition]

lol…except the PPP money went out in your boy’s watch

[MICHHAWK]

the title of the thread is "who you gonna blame?"

uncle joe is sitting in the big chair. the buck stops at the big chair. therefore uncle joe is to blame.

that's how it works.

[Cascadia]

the title of the thread is "who you gonna blame?"

uncle joe is sitting in the big chair. the buck stops at the big chair. therefore uncle joe is to blame.

that's how it works.

Everyone please remember that this is a product of the American education system.

[japhy]

i blame uncle joe. he is sitting in the big chair. the buck stops at the big chair.

Rupert and Rand agree. Grab the rest of the Rubes and tell them to bring their pitchforks and assemble on the front lawn of the Capitol, any Capitol will do.

The Socialists did this! We know this because one of the basic tenants of socialism is redistribution of wealth to the wealthy! Do your research! Follow the money! It leads right to that lazy fat ass Gen Z bastard sitting on his couch and refusing to work at McDonalds!

[PhDhawk]

Other things we can blame Biden for:

9/11
Pearl harbor
Trail of tears
Crucifixion of Jesus
Splitting up of pangea

I mean he is in the "big chair".

[KUTradition]

i blame uncle joe for the holocaust

[KUTradition]

do we get to blame him for things that haven’t happened yet too?

i blame uncle joe for Mars being renamed Musk

[Cascadia]

“Slavery is Bidens fault” - MICH

[japhy]

I think we can all agree, there is some big time grift going on and it is costing us all (OK, maybe not all) of us money. There is only one solution to this problem.

We need to elect a successful big time grifter and con man to the presidency.

The only person we can trust to stop the big grift is a big grifter. They understand the system better than anyone, who would know more about how to stop it?

Sure there may unpredictable consequences, but what have we got to lose?

[KUTradition]

reminds me of Steve Martin in Leap of Faith

You need a real sinner…

[KUTradition]

apparently, the trump admin removed an estimated 2.7 million “flags” on PPP loans during the last month of his presidency

these were loans that had been flagged by federal officials for potential fraud

it also appears that the largest loan recipients were favored in these decisions