CARES ACT CHURCH DISCUSSION March 31, 2020
CARES ACT 2020 Coronavirus Aid, Relief, and Economic Security Act
Paycheck Protection Program (PPP) SBA LOAN SMALL $350 BILLION 2.5 TIMES NO PERSONAL THROUGH BUSINESSES PROVIDED AVERAGE GUARANTY OR LOCAL BANK WITH LESS THAN MONTHLY COLLATERAL 500 EMPLOYEES PAYROLL COSTS REQUIRED FOR 1-YEAR PERIOD
“Payroll Costs” Wages, commissions, salary, or “similar compensation” to an employee or independent contractor Payments for cash tips, vacation, parental, family, medical or sick leave Allowance for dismissal or separation Payment for group health care benefits including premiums and retirement benefits Payment of state and local taxes assessed on compensation of employees
What is not included in “Payroll Costs” Compensation of any individual employee in excess of an annual salary of $100,000, as prorated for the covered period. Payroll taxes (FICA/Medicare employer-matching) Any compensation of an employee whose principal residence is outside the US
LOAN AMOUNT Average monthly payroll multiplied DETERMINATION by 2.5
The sum of the following payments made by the borrower during the 8-week period beginning on the date of the loan: Payroll costs, mortgage interest, rent, certain utility payments, and interest on any other debt incurred before loan period. Borrower must submit to the lender an application that includes documentation verifying the number of employees and pay rates, and cancelled checks showing mortgage, rent, and utility payments Loan Forgiveness
Provision that reduces the amount that may be forgiven if the employer either: ◦ Reduces full-time employees “FTE” during loan period compared to similar period in 2019. ◦ For example, 25 FTE in June 2019 must have 25 Loan FTE in June 2020. If amount of FTE is lower in Forgiveness 2020, then divide 2020 FTE by 2019 FTE, and loan forgiveness is reduced by that percentage. 25 FTE in 2020 divided by 26 FTE in 2019 equals 96%. ◦ 96% of loan amount received could be forgiven if the funds were spent on allowed expenses (previous slide)
Loan Terms – For amount not forgiven Maximum maturity of 2 0.5% years
Calculate “Payroll Costs” Ex. Average monthly $100,000 Multiply by 2.5. Ex. = $250,000 Apply with local bank and provide required documentation from 03/01/2019 to 02/29/2020 Bank will transfer money to your account Example Over following 8-week period, spend $250,000 on payroll, mortgage interest, rent, and qualifying utilities Retain at least the same number of FTE over same period compared to number of FTE in 2019 Apply for loan forgiveness by filling out required documentation Loan is forgiven
Helpful links 1 2 3 4 https://www.injoy https://www.drop https://www.churc https://www.shrm. stewardship.com/c box.com/s/yzw0ls hlawandtax.com/w org/resourcesandt ares-act 1nrmzyxqi/CARES eb/2020/march/w ools/tools-and- %20Act%20PPP%2 hat-cares-act- samples/hr- 0Calculation.xlsx? means-for- qa/pages/calculate dl=0 churches-and- ftehours.aspx church-staff.html
Action items BE READY! GET PREPARED. GATHER CALL YOUR LOCAL BANK DOCUMENTATION. DO THE WHERE YOU HAVE YOUR MATH. KNOW YOUR BUSINESS CHECKING APRIL 3RD NUMBER. ACCOUNT.
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