2020 CARES Act: SBA EIDL and PPP Loans Webinar FRIDAY, APRIL 3, 2020 - - PowerPoint PPT Presentation

2020 CARES Act: SBA EIDL and PPP Loans Webinar

FRIDAY, APRIL 3, 2020

HOUSEKEEPING ITEMS

All attendees have been muted. You will only hear George and Angie speaking. CHAT FEATURE: Use only to send a technical message directly to Angie if you are having issues with the webinar. Q&A FEATURE: If you have a question about the information being presented, type in your question in the Q&A. Your questions will be hidden from other attendees, but we will repeat and answer the question aloud during the broadcast.

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TODAY’S PRESENTER: GEORGE S. DAUGHARTY, CPA

• Principle – Daugharty & Company, P.C.
• Earned a Master in Professional Accounting

degree from the University of Texas-Austin

• Over 25 years as a CPA, including experience on

the corporate side as well as in public accounting with a “Big Four” firm

• Lived A number of years in Atlanta, GA prior to

settling with his family in the beautiful Shenandoah Valley in 2006

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CARES Act

• On March 27, 2020 the House of Representatives passed the

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), commonly known as “Phase Three” of coronavirus economic relief. President Trump signed the bill into law the same day.

• The CARES Act provides much needed stimulus to individuals,

businesses, and hospitals in response to the economic distress caused by the coronavirus (COVID-19) pandemic.

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Small Business Administration (SBA) Loans PAYCHECK PROTECTION PROGRAM (PPP) ECONOMIC INJURY DISASTER LOAN (EIDL)

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PAYCHECK PROTECTION PLAN (PPP)

Allows business suffering due to the coronavirus outbreak to borrow money for a variety of qualified costs related to employee compensation and benefits including

Payroll costs Continuation

• f health care

benefits Employee compensation (of those making less than $100K) Mortgage interest

• bligations

Rent Utilities Interest on debt incurred before the covered period

Covers the period February 15, 2020 through June 30, 2020.

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PAYCHECK PROTECTION PLAN (CONTINUED)

• Eligible companies employ no more than 500 employees
• Maximum amount is 250% of the average monthly amount spent on gross payroll, payments to

independent contractors, and payments to owners

• Repayment of the loan may be deferred 6 months at an interest rate of 1.0 – 4.0 %, due in 2 years
• All or a portion of the of the loan may be forgivable:
• The borrower is eligible for loan forgiveness equal to the amount spent by the borrower on payroll

and certain other business expenses during an 8-week period after the origination date

• Of the amount forgiven, up to 25% can be for amounts spent on rent, or mortgage interest, and

utilities so long as the remaining 75% is spent on payroll

• The amount forgiven may not exceed the principal of the loan
• The forgiveness provisions are to effectively pay employers to retain employees and to rehire any

employees who have already been laid off due to the COVID-19 crisis

• No collateral is needed, and the loan will be an unsecured loan

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PAYCHECK PROTECTION PLAN (CONTINUED)

• PPP loans and EIDL advance loans

cannot be used for the same purpose

• Starting April 3, 2020, small business

and sole proprietorships can apply

• Starting April 10, 2020, independent

contractors and self‐employed individuals can apply

• Other regulated lenders will be

available to make these loans as soon as they are approved and enrolled in the program

• Call your bank or lending

institution to apply. The following local and regional banks are some

• f the SBA approved lenders:
• Blue Ridge Bank
• Farmers & Merchants Bank
• First Bank & Trust Company
• Park View Federal Credit Union
• Pendleton Community Bank
• United Bank

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PAYCHECK PROTECTION PLAN (CONTINUED)

The application is two pages The list of required items is as follows (F&M Bank):

• Copies of payroll tax reports filed with the IRS (including Forms 941, 940, state income and

unemployment tax filing reports) for the entire year of 2019 and the first quarter of 2020.

• Copies of payroll summary reports for each pay period for the preceding 12 months and year-to-date

to include gross wages including PTO.

• Documentation reflecting health insurance previous paid by the company under a group health plan

including owners of the company for the 12 months immediately preceding the date of the SBA loan

• rigination.
• Documentation of all retirement plan funding by the employer for the immediately preceding 12

months.

• Signed SBA Paycheck Protection Program Loan Application (SBA Form 2483).
• Complete Certificate of Incumbency and Beneficial Ownership Information
• 2019 Balance Sheet (to include specific breakdowns as to Fixed Assets; Other Assets; Inventory;

Recs; Cash; Accts Payable; Current Liabilities; and Current LTD)

• 2019 Income Statement (to include specific breakdowns as to Depreciation; Owner Salaries; Income

Taxes; Net Income After Taxes; COGS; Recs; etc.).

• Copy of current and unexpired State issued drivers license or US Passport.
• SBA Loan excel Worksheet showing maximum loan amount.

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ECONOMIC INJURY DISASTER LOAN (EIDL)

Business with no more than 500 employees that have been directly affected by the disaster are eligible to apply.

SOME INELIGIBLE BUSINESSES

Agricultural Enterprises Religious Organizations Charitable Organizations Gambling Concerns Casinos & Racetracks Covers the period January 31, 2020 through December 31, 2020.

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ECONOMIC INJURY DISASTER LOAN (CONTINUED)

APPLICAN APPLICANTS MA TS MAY REQUES Y REQUEST AN T AN AD ADVANCE OF E OF UP UP TO $1 $10,0 0,000 WITH WITHIN THREE D IN THREE DAYS AFTER THE AFTER THE APPL APPLICA ICATIO ION IS RECEIV N IS RECEIVED AND IS NO AND IS NOT SUBJE T SUBJECT T TO REP REPAYMENT ENT, EVEN EVEN IF THE L IF THE LOAN REQUES AN REQUEST IS IS UL ULTIM TIMATELY DENIED. DENIED. What are What are the collat the collateral req ral requirements? irements?

• No collateral required for EIDLs under $25,000
• SBA takes real estate as collateral when it is

available

• SBA will not decline a loan for lack of collateral,

but requires borrowers to pledge what is available EIDLs ma EIDLs may y be be appr approved solely on the ed solely on the basis of basis of an an applicant applicant’s s credit score or b credit score or by use of an alt use of an alternativ rnative e me method t thod to gauge the gauge the applicant applicant’s ability s ability to repa repay.

How w can I us can I use e the e loan funds? loan funds?

• Fixed debts (rent, etc.)
• Accounts payable
• Payroll
• Some bills that could have been paid had the

disaster not occurred

Ho How much can w much can I borr I borrow?

• Up to $2 million
• Interest rates
• Small Businesses 3.75%
• Most Private, Non-Profits 2.75%
• Terms up to 30 years
• Eligibility based on the size, type of business, and

financial resources

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ECONOMIC INJURY DISASTER LOAN (CONTINUED)

• PPP loans and EIDL advance loans cannot be used for the same purpose
• Apply directly on the SBA website at https://covid19relief.sba.gov/#/
• Ineligible Uses of Loan:
• Dividends and bonuses
• Disbursement to owners except when directly related to performance of services
• Repayment of stockholder/principal loans, except when loans are because of the disaster and repayment would cause

hardship

• Expansion of facilities or acquisition of fixed assets
• Repair or replacement of physical damages
• Refinancing long term debt
• Paying down or paying off loans provided, or owned by another Federal agency or a Small business investment company
• Payment of any part of a direct Federal debt, except IRS obligations
• Relocation

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ECONOMIC INJURY DISASTER LOAN (CONTINUED)

Basic Filing Requirements

The SBA has established a streamlined process for those applying for the COVID-19 Economic Injury Disaster Loan. This streamlined process requires applicants to self certify they are eligible for the loans. The streamlined application is completed online and does not require any supporting documentation. We do not know, at this time, what additional items will be requested after the streamlined application has been submitted.

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Comparison of the SBA EIDL and PPP Loan Programs EIDL PPP

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Comparison of the SBA EIDL and PPP Loan Programs EIDL PPP

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ADVICE

ICE BASED ASED ON ON WHA WHAT WE WE KNO KNOW NO NOW FOR OR APPLICANTS APPLICANTS

1. 1. ACT SO SOON: ON: The CARE Act budgeted a set amount for these programs. We feel there are more potential applicants than the amount designated to fund these programs, so apply now. 2. 2. CHOOS CHOOSE AN SBA AFFILIA E AN SBA AFFILIATED BANK: ED BANK: Some banks have stated they are not going to participate in the PPP program, are complaining that they are not making enough money off the program, or are saying they are not getting enough guidance. So, we strongly recommend you find a bank that is an SBA lender and that is publicly and clearly stating they are participating with the PPP. 3. 3. INCL CLUDE AL UDE ALL YOUR UR “P “PAYROLL LL” AL ” ALLOWABL BLE: E: Make sure you correctly include the following amounts when preparing the excel spreadsheet used for your PPP application:  Group Health Insurance  Payroll Tax  Self-Employed Income (and subcontractors.)

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EXAMPLE

XAMPLE: H

: HOW

OW YOUR PPP

PPP LOAN

AN AMOUNT AMOUNT IS IS CAL CALCULA ULATED ED

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ELIGIBLE

LIGIBLE USES SES OF YOUR OUR PPP

PPP LO

LOAN

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CASE

ASE 1: L

1: LOA

OAN FOR ORGIVENESS GIVENESS IF IF “P

“PAY

AYROLL” >

” > 75% 75% OF

OF COS COST IN COVERED P D PERIOD A D AND HEADCOUNT R T REMAINS THE S E SAME

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CASE

ASE 2: L

2: LOA

OAN FORGIVENESS IF “P

“PAY

AYROLL” &

” & HEADCOUNT

HEADCOUNT GO GO DO DOWN WN

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YOUR

OUR NEXT EXT STEP TEP

• Appl

Apply f for the PPP loa r the PPP loan thr through an SB an SBA af A affi filiated Ban Bank

• Apply f

Apply for the EID r the EIDL loan loan onlin

• nline, direct

, directly fr ly from the SBA

• m the SBA

Our office has setup a streamlined process to prepare and submit EIDL loans on behalf of

• ur clients who have already provided us information for preparing their 2019 tax returns.

For those clients we will prepare and remit the EIDL application by midnight Tuesday, April

• 7th. Our fee for the EIDL application will be $135.00

We are setting up a streamlined process for assisting clients with their PPP application, but

• ur fee for this work will be based upon our standard billing rates.

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THANK

HANK YOU OU.

• Thank You for attending.
• This slide and a pdf of the EIDL application and a checklist for the PPP application have been made available on our website
• If you have any further questions please contact our office

Daugharty & Company, PC 370 Neff Avenue, Suite F Harrisonburg, VA 22801 (540) 437-2350 Daugharty & Company, PC 132 North Main Street Woodstock, VA 22664 (540) 459-9000

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