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Treasury Provides Additional FAQs for the Paycheck Protection Program

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As the second round of funding for the Paycheck Protection Program was finalized last week, the Treasury was actively updating the Frequently Asked Questions regarding the program.

Beginning with question 31, updates include clarification as to whether businesses owned by large companies qualify for a PPP loan, housing stipends, U.S. residency requirements for employees, as well as employee headcount for purposes of the eligibility threshold. The Treasury also provided answers to questions regarding agriculture producers and coops.

To read the entire Paycheck Protection Program FAQ update, click here.

 

 

 

DISCLAIMER:  The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

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Treasury Provides Additional FAQs for the Paycheck Protection Program

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As the second round of funding for the Paycheck Protection Program was finalized last week, the Treasury was actively updating the Frequently Asked Questions regarding the program.

Beginning with question 31, updates include clarification as to whether businesses owned by large companies qualify for a PPP loan, housing stipends, U.S. residency requirements for employees, as well as employee headcount for purposes of the eligibility threshold. The Treasury also provided answers to questions regarding agriculture producers and coops.

To read the entire Paycheck Protection Program FAQ update, click here.

 

 

 

DISCLAIMER:  The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

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$484B Paycheck Protection Program and Health Care Enhancement Act Signed Today

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We are ending the week on a better note than last. The House passed the Paycheck Protection Program and Health Care Enhancement Act, and President Trump signed the bill earlier today which will add $484B to help small businesses, hospitals and first responders, as well as increase nationwide testing for coronavirus.

With news that States are reopening businesses, and more funding for relief programs, we want to remind everyone of available programs through the IRS regarding Coronavirus tax relief for businesses and tax-exempt entities.

For a summary of tax relief available click here.

Employee Retention Credit, click here.

Coronavirus-Related Paid Leave for Workers and Tax Credits for Small- and Mid-Size Businesses, click here.

Frequently asked questions about carrybacks of NOLs for taxpayers who have had Section 965 inclusions, click here.

We will continue to navigate these uncertain times and stay abreast of news that we believe is relevant for you and your business.

 

 

 

 

DISCLAIMER:  The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

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SBA Publishes Report on Paycheck Protection Program Loan Approvals

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It’s been a whirlwind week. Payroll Protection Program Loans are getting finalized and the traditional Tax Day came and went. We have new projects to focus on: the July 15th deadline and PPP Loan compliance. We will also have a focus on assisting businesses with cash flow management and budgeting in the challenging times ahead.

We know the importance of being proactive. Don’t wait. Plan now. Businesses that are prepared have a better chance at success. Whatever type of challenge your business is facing, we can help.

In other news, the Small Business Administration has published reports on approved loans, by industry and state, through the Paycheck Protection Program. The most recent report was published on April 16th at 12 noon.

Construction Industry Receives Most Loan Dollars from PPP

We were pleased to see the loans broken down by industry. At the top of the list is Construction with the highest overall % of loan dollars by sector at $44,906,538,010. Professional, Scientific, and Technical Services followed at $43,294,713,938 in loan dollars and finishing out the top three is Manufacturing with $40,922, 240,021. Our expertise has always focused on these industries and we look forward to assisting with loan compliance for our clients.

Another take away from this report is that more than 55% of loans are under $1M and over $70% of the loans are under $2M. This is a very good sign for small businesses in America.

DISCLAIMER:  The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

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Paycheck Protection Program Money Exhausted, What Options Remain?

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Earlier today, news broke that funding for the Paycheck Protection Program was exhausted. The SBA posted the following message on their website: “The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time.”

We have heard from clients, who were in different stages of the loan process, that their lender cannot proceed due to lack of funds. With the status of adding $250 billion in additional funding to the popular program in limbo, some lenders recommended that their clients contact their congress person. Many lenders continue to work on loan applications with the hope that additional funding will be approved.

Additional Relief Options For Businesses

Economic Injury Disaster Loans (EIDL)

The EIDL provides “vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing as a result of the COVID-19 pandemic. The Economic Injury Disaster Loan advance funds will be made available within days of a successful application, and this loan advance will not have to be repaid. This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19.”

Main Street Lending Program

The Federal Reserve announced this program “will enhance support for small and mid-sized businesses that were in good financial standing before the crisis by offering 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion. Principal and interest payments will be deferred for one year. Eligible banks may originate new Main Street loans or use Main Street loans to increase the size of existing loans to businesses. Banks will retain a 5 percent share, selling the remaining 95 percent to the Main Street facility, which will purchase up to $600 billion of loans. Firms seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers.”

Employee Retention Credits

Employee Retention Credit applies to “qualified wages paid after March 12, 2020, and before January 1, 2021. The maximum amount of qualified wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an Eligible Employer for qualified wages paid to any employee is $5,000.”

If you do choose to use Employee Retention Credits, please know if the Paycheck Protection Program receives additional funding, you cannot take Employee Retention Credits and apply for a Paycheck Protection Program loan.

 

 

 

 

 

DISCLAIMER:  The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

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More Requirements for Businesses Applying for Paycheck Protection Program Loans

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We have heard from several bankers that the SBA released additional directives to lenders participating in the Paycheck Protection Program (PPP). The SBA also updated the FAQs. Applicants are now asked to provide lending institutions a certified document listing how they will use the monies from the PPP, prior to loan approval.

The main purpose of the loan is to help keep the maximum possible number of employees on board, which is why the payroll amount must be >75% of the total loan amount requested. Keep in mind, payroll does not include 1099s. The balance of the loan amount may be used for rent, utilities, mortgage interest, and interest on debt pre-February 15, 2020.

Forgiveness Calculation Sheet

Many banks have provided a separate loan forgiveness calculation sheet for their borrowers to use. Some forms are less complicated to complete than others. This estimated forgiveness worksheet, and its supporting documentation, will enable lenders to provide the SBA with a good faith estimate before the SBA releases funds to the bank.

In addition to the Forgiveness Calculation sheets, some lenders are asking for entity creation documents and entity operating documents. Many businesses do not have access to the original documents. If you do not have copies, we recommend that you contact your attorney.

In addition to signatures of authorized owners, applicants are also being asked to provide EIN/SSN and a Driver’s License number.

What We Recommend

Apply for the Paycheck Protection Program Loan. If you are approved, before you accept the loan, determine if the loan is a better option compared to the Employee Retention Credit. Do your due diligence. Compare the two forms of financial relief. You are only permitted one loan and not able to use it in conjunction with the Employee Retention Credit.

No one knows how long our nation and businesses will be affected by the COVID-19 emergency. Make certain you choose wisely.

DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

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URGENT INFORMATION ABOUT THE PAYROLL PROTECTION PROGRAM

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The U.S. Department of Treasury has released the Payroll Protection Program application, important documentation regarding the Borrower Information Fact Sheet and the Lender Information Fact Sheet.  This urgent information should be reviewed and completed immediately if you plan to seek a loan under this program.  All loan terms will be the same for everyone.  Be certain to pay attention to the Application Form and obtain assistance if needed. It is critical to complete your application form accurately to prevent delays for submitting an incomplete application.

  • Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and certain other expenses through existing SBA lenders.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.

The loan amounts will be forgiven if the proceeds are used to cover payroll costs, and most mortgage interest, rent and utility costs over the 8-week period after the loan is made; and employee compensation levels are maintained.  Payroll costs are capped at $100,000 on an annualized basis for each employee.  It is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will need to complete the application and submit to an approved lender that is available to process your application by June 30, 2020.

You are encouraged to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.

All payments on the loan are deferred for 6 months.  Interest will accrue on the loan at a fixed interest rate of 0.50%.

There is no prepayment penalty or fees.  No collateral is required.  There is no personal guarantee requirement.

You will need to certify in good faith that:

  • Current economic uncertainty makes the loan necessary to support your ongoing operations.
  • The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
  • You have not and will not receive another loan under this program.
  • You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
  • All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
  • You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews

Updated March 31, 2020

DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

Additional Articles by Wouch Maloney

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