Hey Small Business Owners...What are you doing to ride the storm out?

[mililo4cpa]

Originally Posted by Dallas Chief

Great article. I was wondering what to do about the professionals on our staff that made more than $100k and I think the article cleared it up. My banker doesn't really know anything that granular. (shocking!)

I was alarmed at the statement in the article about these not being funded for 3-4 weeks. That's really no different than a regular SBA loan, the only difference being is the shorter application and less vetting. That will be too little too late for a lot of businesses. We may be OK, but I know others that won't. Sucks.

For those above $100K: in the formula, you add in all the payroll, but then back out the amounts over $100K....For instance (an overly simplistic example), let's say you have 1 employee who made $110K. You would count the $110K as your payroll, but then back out $10K to get it down to the $100K limit.

As far as usage goes....theres a number of scenarios, but you'll want to make sure you get total loan forgiveness on the PPP and even on the EIDL portion that you roll into it....that's for another post

[Trivers]

Letter from President of Bank:



Dear Valued Customer,



You have most likely been inundated with information regarding the Paycheck Protection Program under the CARES Act as well as information on the Families First Coronavirus Response Act (FFCRA). We would like to touch base with you on these programs and provide information on how we can help.



CARES Act and the Paycheck Protection Program

On March 27, 2020, Congress passed and the president signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides economic support intended to be quickly available to workers and businesses. The Paycheck Protection Program is one of the largest sections of the Act and offers an estimated $349 billion in government-guaranteed loans to small businesses and non-profit organizations. While the program details are still being finalized, here is what we know so far.



Under the Paycheck Protection Program:

· You may be eligible if you are a small business with fewer than 500 employees, are a select type of business with fewer than 1,500 employees, are a 501(c)(3) non-profit with fewer than 500 workers, or are a 501(c)(19) veteran organization. Businesses must have been in operation on February 15, 2020 and had employees for whom it paid salaries and payroll taxes.

· Eligible recipients may qualify for a loan up to $10 million determined by 8 weeks of prior average payroll, plus an additional 25% of that amount.

· Loan payments under the program will be deferred for six months.

· If you maintain your workforce, SBA will forgive the portion of the loan proceeds that are used to cover the first 8 weeks of payroll and certain other expenses following loan origination.

· Loans will be guaranteed 100% by the U.S. Government

· No annual fee; no guarantee fee; no collateral requirement; no personal guarantee

· Maximum interest rate of 0.50%; maximum term and amortization of up to 2 years



Applying for the Paycheck Protection Program (PPP):

The Paycheck Protection Program is being implemented by the SBA with support from the Department of the Treasury. The SBA is working on finalizing the development of the program, and while all the details have not yet been communicated to financial institutions, we wanted to share with you important information on how you can start preparing your application for submission.



Preparing your application now will help ensure it is processed as efficiently as possible. Please know our dedicated team of bankers is ready to assist once we have all the details from the SBA and the program is officially put into place. We are a certified and Preferred SBA Lender. As such, we will be able to submit applications to the SBA the moment the program is implemented, which is expected to be Friday, April 3.



Step 1:

Read through and garner an understanding of the sample application. The SBA published a sample application form on March 31. Note, this is still a “sample”; however, it can assist you in preparing your application ahead of time. We expect a final version of the application will be published by the SBA on Friday, April 3.



Step 2:

Start compiling all necessary paperwork. Please note: we have not received final guidance on what documentation will be required along with your application; however, we anticipate it will include the following:

· 2019 year-end financial statements and most recent interim financial statements

· Number of employees on your payroll for the last 12 months as well as pay rates

· IRS payroll tax filings and state income taxes

· Payroll and unemployment insurance filings

· Employer paid health insurance premiums and employer retirement contributions for the last 12 months

· Payments on covered mortgage obligations, lease obligations, and utilities



Step 3:

Complete the sample PPP calculator we created for you (four separate tabs). You may use this sample calculator to determine the amount of your loan request as well as the anticipated forgivable portion of your loan. Again, this is a sample that we believe will be close to what the final calculator will look like from the SBA. This sample will provide an indication of your final loan amount. We ask that you fill in the forgivable amount in the calculator as you may not be able to get your entire loan amount forgiven. In the event this occurs, the remaining amount not eligible to be forgiven will be at an interest rate of 0.50% over 2 years.



Step 4:

Submit these preliminary items to your relationship manager. Once we receive the information, your relationship manager will review and will reach out if we have any questions. Please note: we may reach out for additional items once we get final details on the program from the SBA.



The Families First Coronavirus Response Act (FFCRA)

The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The Department of Labor’s Wage and Hour Division administers and enforces the new law’s paid leave requirements. For more information regarding the FFCRA and its requirements, click here.



Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage. For more information, please see the Department of the Treasury’s website.



Where to Seek Assistance

We ask that you please check with your accountant or tax advisor as seeking the tax credit approach may be more beneficial as opposed to one of the loan programs. As we understand, you cannot take both tax credits and loan forgiveness. Also, once you choose a program, certain circumstances may prohibit you from applying for another loan program.



We understand you may have questions as you navigate through the details of these programs. Please know our team is working diligently around the clock to serve our customers and are here to help. Please contact your local office or relationship manager, and they will assist with any questions or concerns you may have.




Additional Resources:

· U.S. Chamber of Commerce Resources for Business

· Small Business Administration (SBA) Small Business Guidance & Loan Resources

· Small Business Administration (SBA) Disaster Assistance

· Sign up to receive SBA Updates

· Sample Payroll Protection Program (PPP) application

· Sample Payroll Protection Program (PPP) calculator

· IRS FAQs on Employee Retention Credit

[Trivers]

PPP Calculator

[Dallas Chief]

Originally Posted by Trivers

PPP Calculator

Awesome!

Still confused on the rent/lease/interest debt portion. Where do we input that into the loan calculation?

[mililo4cpa]

Originally Posted by Dallas Chief

Awesome!

Still confused on the rent/lease/interest debt portion. Where do we input that into the loan calculation?

Those do not get put into the loan calculation amount. However, those are valid uses of the PPP funds, and will be used to help calculate the loan forgiveness....

[Dallas Chief]

Originally Posted by mililo4cpa

Those do not get put into the loan calculation amount. However, those are valid uses of the PPP funds, and will be used to help calculate the loan forgiveness....

Thanks. I was afraid that was the case. Doesn't make a whole lot of sense. Asking for a loan based solely on payroll expenses. But it can be used and forgiven for things like rent. But we aren't supposed to lay off employees that the loan was based on keeping. So how does it cover something like rent if it is to be used for payroll? 'Merica

[Mr. Plow]

Originally Posted by Dallas Chief

Thanks. I was afraid that was the case. Doesn't make a whole lot of sense. Asking for a loan based solely on payroll expenses. But it can be used and forgiven for things like rent. But we aren't supposed to lay off employees that the loan was based on keeping. So how does it cover something like rent if it is to be used for payroll? 'Merica

That's why they are letting you ask for 2 1/2 times your monthly payroll. The 2 is for your payroll, the 1/2 is for your utilities/rent/etc.

[Buehler445]

FWIW I got my banker up pretty hard since I can apply tomorrow.

I asked him if I apply for the PPP through him if it kicks me out of an EIDL loan. My business a couple months payroll is pretty immaterial in terms of expenses. And depending on how this shakes out payroll might be the easiest check for me to cut. What he told me is you can still apply for the EIDL you just can’t use those expenses.

He also said their guidance is that they don’t need any “packagers” whatever that means and you should apply through the website.

Take that for what it’s worth. There is nothing saying my banker is any sort of right here but that’s what he told me.

I’ll probably take a look at the EIDL application first. If it looks more promising I may forego the PPP loan.

[mililo4cpa]

Originally Posted by Buehler445

FWIW I got my banker up pretty hard since I can apply tomorrow.

I asked him if I apply for the PPP through him if it kicks me out of an EIDL loan. My business a couple months payroll is pretty immaterial in terms of expenses. And depending on how this shakes out payroll might be the easiest check for me to cut. What he told me is you can still apply for the EIDL you just can’t use those expenses.

He also said their guidance is that they don’t need any “packagers” whatever that means and you should apply through the website.

Take that for what it’s worth. There is nothing saying my banker is any sort of right here but that’s what he told me.

I’ll probably take a look at the EIDL application first. If it looks more promising I may forego the PPP loan.

First and foremost: APPLY FOR ALL OF IT!

Second: As I understand it, as long as you don't use PPP and EIDL for same purpose, you still may qualify for both. for instance, if you use PPP for payrolls (as intended), you may be able to EIDL for other expenses. The banks I'm talking to are very vague on this, so don't take this verbatim

Third: You can roll EIDL into your PPP amount. So that alone doesn't eliminate you from PPP if you receive EIDL funds

Fourth: EIDL you apply directly through the SBA. There are diligence requirements, but not during the initial application. PPP, you apply through a participating bank, and the loan is backed by the SBA. The bank is responsible for the "underwriting", but basically other than validating payroll amounts and that the business was in existence, there really isn't any underwriting requirements.

Fifth: Even the banks don't have good answers on specific details. for instance: the SBA is backing the loan for one year, but terms are two years. So, banks are concerned that they are taking on risk without the benefit of underwriting....and they have no idea how to mitigate at this point. Of course, they are paid a processing fee from the SBA, so my best guess is the money they receive for processing is meant to mitigate any risk. I anticipate 75 - 80% of the loan value to be forgiven, which means there could be upwards of $70M in risk taken on!

So, don't forego the PPP, because you can re-fi the EIDL into it. But more to your point, you may get more benefit out of the EIDL than the PPP, although you won't get the loan forgiveness

[SAUTO]

I could be totally off but I think that 10k of an eidl loan will be forgiven also.

That could be more than the ppp for some

[mililo4cpa]

Originally Posted by SAUTO

I could be totally off but I think that 10k of an eidl loan will be forgiven also.

That could be more than the ppp for some

This is correct...the initial "Bridge" $10K....

Also, if you you convert the EIDL to PPP, and assuming you use the PPP as intended (for payroll), you also get loan forgiveness (up to additional 25%) for mortgage interest, utilities, and rent....I believe that would eat into the EIDL portion of the loan....

[Buehler445]

Originally Posted by SAUTO

I could be totally off but I think that 10k of an eidl loan will be forgiven also.

That could be more than the ppp for some

Definitely is in my case. My whole payroll is less than corn herbicide by itself.

[mililo4cpa]

Originally Posted by Buehler445

Definitely is in my case. My whole payroll is less than corn herbicide by itself.

But you still get loan forgiveness via the PPP, plus rent, utilities, and mortgage interest and can still roll the EIDL in.

So, hypothetically, if you cover payroll with your PPP, and still get the $10K forgiveness on the EIDL bridge, why wouldn't you do that?

[Buehler445]

Originally Posted by mililo4cpa

But you still get loan forgiveness via the PPP, plus rent, utilities, and mortgage interest and can still roll the EIDL in.

So, hypothetically, if you cover payroll with your PPP, and still get the $10K forgiveness on the EIDL bridge, why wouldn't you do that?

I’m going to apply for both for sure. But I learned long ago with government promises I won’t count it until the check clears.