PPP loan forgiveness and other questions answered

Sharon Epperson

Pawel Gaul | iStock | Getty Images

Millions of Americans are struggling financially, trying to make ends meet after being laid off or furloughed, and worried about when they will receive unemployment benefits. Adults of all ages are anxious about the arrival of stimulus payments. And many small business owners fear that even if they are able to qualify for a new government loan, they may not be able to pay it back.

The $2.2 trillion CARES Act has provided several programs to help Americans weather this storm, but there are still so many questions. We asked bankers, credit counselors, financial advisors and tax experts to weigh in to get you some answers. 

 I am 18 years old and no longer staying with my parents. I live on my own, but last year I wasn’t, so I was claimed as a dependent. Does this mean I won’t get a stimulus check for myself ? I was laid off my everyday job due to the virus, and now I am living on my own in a drought. Any advice?

—Dee

You may qualify for your own stimulus payment if you meet certain income requirements, but you won’t see any of that money until next year. Economic impact payments are technically advance tax credits for 2020. If your income drops this year, you may be eligible for any credit you were not able to claim using your 2019 or 2018 return, according to the Tax Foundation.

“The IRS will pretend like the credit is just like money that was withheld from their paycheck. So if the credit and their payroll withholdings are more than what they owe in tax, the IRS will pay them the difference as a refund,” said Richard Winchester, a tax policy expert and visiting professor at Seton Hall University School of Law. 

If your adjustable gross income falls below $75,000 for 2020, you would qualify for a $1,200 tax credit and it would be applied to this year’s tax bill. If that credit exceeds the amount you owe in taxes, you should get a refund once you file your 2020 return next year. 

I own a small business in California and am finally able to apply for the Paycheck Protection Program loan the second time around. My question is, what happens if I don’t get full PPP loan forgiveness? Are there other options?

—Sierra

If the loan that you receive through the Paycheck Protection Program is not completely forgiven, you will have to repay the money. This is how loan forgiveness works under the PPP rules: 

First, your small business must maintain its headcount of full-time employees through June 30, 2020.  Second, it must not reduce the compensation paid to any employee by more than 25%. Third, at least 75% of the money must be used to pay employee compensation and benefits. 

“If it fails to meet all three of these conditions, the business will have to return a portion of the money over a two-year period at 1% interest, with an option to delay the first payment for six months,” Winchester said.

If your business does not meet those requirements and full forgiveness is not given, you’ll have to carry the loan. That’s why small business owners should “be clear about how much money they truly need for payroll before taking out the loan,” said Josh Folds, market president at First Horizon Bank in Palm Beach Gardens, Florida. If you have to pay it back, he said, “fortunately, the interest rate on PPP loan payments is relatively low compared to other loan programs.” 

When are we going to get our stimulus payment? I’m on Supplemental Security Income and I don’t file taxes. They keep saying the checks are coming soon, but we’re still waiting. I’m worried that we just aren’t going to get the stimulus money.

—Anonymous

Social Security and Social Security Income recipients without dependent children will receive their economic impact payments automatically without having to file any additional forms, according to the IRS and Social Security Administration. You’ll get the full $1,200 payment if your adjusted gross income is under $75,000.

The IRS says payments will be based on your 2019 benefits and will be sent to SSI recipients the same way you get your normal benefits, either through direct deposit, Direct Express debit card or paper check. 

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You may be able to use the IRS’ Get My Payment tool to provide or update your bank information to receive an electronic payment faster.

If you have a dependent under age 17, you should fill out the Non-Filers form on the IRS.gov website by May 5 to make sure you get the $500 payment for your child. 

The Treasury Department said it expects payments for SSI recipients to go out no later than early May.

On April 15 I checked my mother’s checking account and saw that a $1,200 stimulus check had been deposited directly to that account through the IRS. I am trying to find out how to return it. Can you help? I am not the only person whose deceased loved one has received this money. She died in Dec. 2019, and I was going to notify the IRS when I filed her taxes.

—Donna

Treasury Secretary Steven Mnuchin said in an interview last week that deceased people aren’t eligible for the $1,200 stimulus payments some of them have been getting, and their relatives and estates should pay the money back to the government. However, he did not offer guidance as to exactly how you are to return that payment. For now, financial advisors suggest you hang on to the money and don’t spend it. 

I have lost my job due to coronavirus. I filed for unemployment in Texas last Friday. When I check the status of my application, it says I should call, but the phones are jammed. I have been calling almost 100 times a day but can’t get through. What other options do I have?

-Hossain

More than 30 million Americans have filed for unemployment insurance since mid-March. The Labor Department says it generally takes two to three weeks after you file your claim to receive your first benefit check, but this may differ by state. Also, your unemployment benefits may be delayed due to a surge in volume being reported by unemployment offices around the country.

Continue to call or go to the website of your state’s unemployment insurance program to get updates on your claim. Find a list of state websites at CareerOneStop.org.

Ed Serna, executive director of the Texas Workforce Commission, said the state’s unemployment agency gets more than a million calls a day. Many filers are calling to just make sure everything is OK with their claim.

“We’re going to start calling outbound in a really big way and reaching out to individuals to contact them instead of them constantly trying to contact us,” Serna said on a Texas Standard news radio show on Monday. “You can still try to contact us. That’s OK. But we’re going to be outbound calling and contacting people to get these issues resolved.” 


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