A STEP-BY-STEP GUIDE ON THE PPP Co-hosted by The Asian Bar - - PowerPoint PPT Presentation

A STEP-BY-STEP GUIDE ON THE PPP

Co-hosted by The Asian Bar Association of Washington http://abaw.org Jeff Liang http://ling-liang.com April 23, 2020 April 25, 2020 April 26, 2020

ABAW is Washington State's largest voluntary bar association of Asian attorneys. Formed in 1987 by a small group of Seattle area attorneys, ABAW now counts hundreds

• f

member attorneys, judges, professors, and law students in a wide range of practice areas and locations in the state

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Washington and throughout the country. As the voice for the Asian Pacific American legal profession in the State

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Washington, ABAW promotes justice, equity and opportunity for Asian Pacific Americans. We serve as a resource for our members and foster professional development, legal scholarship, advocacy and community involvement.

https://www.abaw.org/

NOTICE: All materials in this presentation and provided to you are informational. Any answers to questions will not be considered legal or tax advice. Also, you should be aware that the rules and laws created to respond to COVID-19 are changing quickly, and information in this presentation may become out of date.

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CARES ACT

Effective March 27, 2020 Created Paycheck Protection Program (PPP) Initial $349 billion (all gone) Proposed $310 billion (Pending)

Expansion of Economic Injury Disaster Loan (EIDL) Other loans for investment capital, non-disaster

loan (not covered here)

EIDL PPP The Small Business Administration

EIDL VS. PPP – WHO IS THE LENDER?

EIDL PPP The Small Business Administration

• Bank
• Business account
• Personal account
• Ask if need a bus. Acct.
• Non-Banks
• PayPal
• Intuit
• Square

EIDL VS. PPP – WHO IS THE LENDER?

EIDL PPP

• Any business that has 500 or

less

• Sole proprietors or

independent contractors

• Non-profits

EIDL VS. PPP – WHO CAN APPLY?

EIDL PPP

• Any business that has 500 or

less

• Sole proprietors or

independent contractors

• Non-profits
• Businesses that were open on
• r before 2/15/2020 and have

500 or less employees

• Sole proprietors or independent

contractors that were in

• peration as of 2/15/2020
• Non-profits in existence on or

before 2/15/2020 and have 500

• r less employees

EIDL VS. PPP – WHO CAN APPLY?

EIDL PPP

• YES, SBA may initiate a hard

inquiry on your credit report

• This will reduce your credit

score.

• Likely not worth it. More on

this later.

EIDL VS. PPP – IS THERE AN IMPACT ON MY CREDIT REPORT?

EIDL PPP

• YES, SBA may initiate a hard

inquiry on your credit report

• This will reduce your credit

score.

• Likely not worth it. More on

this later.

• NO, banks will not check your

credit

• NO impact on your credit

report (unless you default on the terms of the PPP)

EIDL VS. PPP – IS THERE AN IMPACT ON MY CREDIT REPORT?

EIDL PPP

• Financial obligations and
• perating expenses
• If getting PPP, can’t use for

what’s covered under PPP (payroll costs, rent, utilities, etc.)

• BUT can do so after PPP loan is

forgiven or paid off

EIDL VS. PPP – WHAT IS THE LOAN FOR?

EIDL PPP

• Financial obligations and
• perating expenses
• If getting PPP, can’t use for

what’s covered under PPP (payroll costs, rent, utilities, etc.)

• BUT can do so after PPP loan is

forgiven or paid off

• Permitted costs which are:
• Salaries, wages, etc.
• Health insurance premiums
• Payments of interest on any

mortgage obligation but excluding any prepayments

• r payments of principal
• Rent
• Utilities

EIDL VS. PPP – WHAT IS THE LOAN FOR?

EIDL PPP

• No

EIDL VS. PPP – IS THE LOAN FORGIVABLE?

EIDL PPP

• No
• Yes. SBA will issue guidance.
• 100% forgiven if:
• 75% used on Payroll Costs
• Maintain employee

headcount for 8 weeks when compared to (2/15/19 through 6/30/19 or 1/1/20 through 2/29/20)

• Don’t reduce compensation
• f any EE making $100K or

less by more than 25%

EIDL VS. PPP – IS THE LOAN FORGIVABLE?

EIDL PPP

• $2 million max
• Up to $200K without personal

guarantee (but will need to provide collateral in business assets)

• Can not use to pay same

expenses as covered under PPP

EIDL VS. PPP – HOW MUCH CAN YOU GET?

EIDL PPP

• $2 million max
• Up to $200K without personal

guarantee (but will need provide collateral in business assets)

• Can not use to pay same

expenses as covered under PPP

• 2.5x your “payroll costs” (max
• f $2 million)
• Time period
• 2019; OR
• 12 months prior to

application

• If not in business between

2/15/2019 to 6/30/2019, then 1/1/20 to 2/29/20

EIDL VS. PPP – HOW MUCH CAN YOU GET?

WHAT ARE PAYROLL COSTS?

Payroll costs INCLUDE:

Compensation (salary, wage, self-employ. income, etc.) Payment for vacation, parental, family, medical, or sick

leave (except for provided under FFCRA)

Allowance for dismissal or separation Group health care insurance premiums Retirement benefits State or local tax (L&I, ESD) Employee’s share of federal employment tax

WHAT ARE PAYROLL COSTS?

Payroll costs EXCLUDE:

Monetary compensation exceeding $100,000 Employer’s share of federal employment taxes Compensation of employees who live outside of U.S. Sick and Family leave paid under Families First

Coronavirus Response Act

EIDL PPP

• Advance = $1,000 per

employee/owner up to $10,000 max

• Not obligated to repay

Advance even if you don’t qualify for EIDL

EIDL VS. PPP – HOW MUCH CAN YOU GET?

EIDL PPP

• Advance = $1,000 per

employee/owner up to $10,000 max

• Not obligated to repay

Advance even if you don’t qualify for EIDL

• EIDL Advance reduces PPP

loan forgiveness: $30,000 PPP Loan

• $10,000 EIDL Advance

= $20,000 max PPP loan forgiveness

• EIDL not worth it unless you

need a loan for capital expense

EIDL VS. PPP – HOW MUCH CAN YOU GET?

EIDL PPP

• Term: 30 years
• Interest
• For-profit: 3.75% annual

interest

• Non-Profit: 2.75% annual

interest

• First payment due 12 months

after loan date

EIDL VS. PPP – WHAT’S THE TERM AND INT. RATE?

EIDL PPP

• Term: 30 years
• Interest
• For-profit: 3.75% annual

interest

• Non-Profit: 2.75% annual

interest

• First payment due 12 months

after loan date

• Term: 2 years for unforgiven

portion of PPP loan

• 1% annual interest
• First payment due within 6

months from loan date

EIDL VS. PPP – WHAT’S THE TERM AND INT. RATE?

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TIPS FOR PPP

STEP 1: Find a PPP lender

Check with your bank where you have a business

account

If no business account, then go to bank where you have

personal account and ask if you are required to have a business account to apply

Non-Banks

PayPal

Intuit Square

TIPS FOR PPP

STEP 2: Complete these forms (click on the links)

PPP Application form (as of 4/20/20) Payroll Cost Calculator (talk to CPA) or use one of these

spreadsheets:

Self-employed All others (in business 2/15/19 to 6/30/19)

I will do a few samples at the end before Qs

TIPS FOR PPP

STEP 3: Gather the following corporate documents (PDFs):

Corporation and Non-Profit Corporation:

❑Articles of Incorporation ❑Initial Annual Report ❑Bylaws ❑Business Licenses ❑EIN letter from IRS ❑(Non-profits) Get a Board Consent to authorize borrowing ❑Bank might require additional documentation

TIPS FOR PPP

STEP 3: Gather the following corporate documents (PDFs):

LLC:

❑Certificate of Formation (might be called Articles of

Organization outside of WA state)

❑Annual Report ❑Operating Agreement (aka LLC Agreement) ❑Business Licenses ❑EIN letter from IRS ❑Bank might require additional documentation

TIPS FOR PPP

STEP 3: Gather the following corporate documents (PDFs):

Sole proprietor – no entity (but you should have one for

personal liability protection):

❑Business Licenses ❑EIN letter from IRS (if you got one, otherwise you will use your

SSN)

❑Bank might require additional documentation

TIPS FOR PPP

STEP 4: Gather these financial documents (Corp., NPF, LLC)

• 1. 2019 IRS Forms 941 and

annual Forms W-3 or 944

• 2. Payroll reports for

calendar year 2019 or the previous 12 months

• 3. Healthcare costs — all

health insurance premiums paid under a group health plan

• 4. Retirement plan

documentation showing the sum of all retirement plan funding costs paid by the organization.

• 5. Get from payroll service

(Gusto or ADP)

• 6. Leases, mortgages

statements, etc.

TIPS FOR PPP

STEP 4: Gather these financial documents (self-employed)

• 1. 2019 IRS Form 1040

Schedule C (even if you haven’t filed, you will need to complete Schedule for 2019

• 2. 2019 Profit and Loss
• 3. 2019 IRS Form 1099-MISC
• 4. 2019 Bank Statements
• 5. 2020 Bank Statements
• 6. If you have employees,

provide payroll documentation stated in previous slide

TIPS FOR PPP

STEP 5: Hurry Up and Wait

Apply with your PPP lender Upload your documents Wait…wait…wait. Some lenders give status updates Bank will approve SBA will approve You sign loan docs (likely E-sign) Get your PPP funds within 10 days Be Patient but Persistent

WHAT HAPPENS NEXT?

Your 8-week window to use the PPP funds starts on the

date you get your funds.

The SBA is going to issue guidance on how you can qualify

for PPP loan forgiveness.

Currently, no one knows, including myself.

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HOW TO DOWNLOAD YOUR DOCUMENTS?

• 1. Click here

https://www.sos.wa.gov/c

• rps/
• 2. Click on “Business Search”

and a new window will appear

• 3. Ignore the Customer

Login boxes

• 4. Look for “Corporation

Search”

• 5. Enter your PC or PLLC and

elect “Search”

• 6. Click on your entity name

(Continued on next slide)

This is for WA but other states should have something similar

HOW TO DOWNLOAD YOUR DOCUMENTS?

• 7. A window titled “Business

Information” should open with your entity’s address and other info:

• 8. At the bottom, click on

“Filing History”

• 9. A list of entries should

appear

• 10. Find “Articles of

Incorporation” (Corp), “Certificate of Formation” (LLC), and “Annual Report”

• 11. Select “View Documents”.
• 12. Download your

document

This is for WA but other states should have something similar

CAN’T FIND YOUR BUSINESS LICENSE?

• 1. Go to:

https://secure.dor.wa.gov /gteunauth/_/#2

• 2. Find and click on

“Business Lookup” (third from the bottom)

• 3. Enter your business name
• r UBI and select Search
• 4. Your business name

should appear

• 5. Click on it
• 6. Print the screen which

shows a record of your business license (print to PDF as well)

This is for WA but other states should have something similar

CASE STUDIES OF PPP

Maili Robin Steph

Total PPP Loan $20,833.00 Max Net Profit Replacement is 8/52nds of Line 31 of Schedule C 2019 (max of $100,000) $100,000 x (8/52) = $15,384.62 If 75/25 Rule applies, then Steph spends

• n utilities, rent, mortgage interest (that is

deductible on Schedule C) $5,208.25 on Non-Payroll Costs (25% max

• f PPP loan of $20,833.00)

Remaining balance $240.13 + whatever amount Steph could not spend on Non- Payroll Costs will be repaid at 1% over 2 years If 75/25 Rule DOES NOT apply, then Steph spends on utilities, rent, mortgage interest (that is deductible on Schedule C) Remaining $5,448.38 on Non-Payroll Costs Whatever amount not spent on Non- Payroll Costs will be repaid at 1% over 2 years

STEPH (SELF-EMPLOYED) PPP LOAN FORGIVENESS

LINKS

SBA PPP Page AICPA PPP Support Page Schedule a free consultation with Jeff Liang here:

Booking Link

YOUR SUPPORT BUT NOT REQUIRED

If you are an attorney, legal professional, judge, or law

student, please consider joining ABAW: Join or at https://www.abaw.org/

Otherwise, please consider donating to help ABAW

support API law students. Last year, we awarded over $32,500 in scholarships and will need your help this year: Donate Here if you can help us

Jeff Liang (jeff@ling-liang.com) Ling & Liang, PLLC 671 S. Jackson St. Suite 201 Seattle, WA 98104 (206) 462-2884 Schedule a Free Consult Here: Booking Link

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