CARES ACT CHURCH DISCUSSION March 31, 2020 CARES ACT 2020 - - PowerPoint PPT Presentation

CARES ACT CHURCH DISCUSSION

March 31, 2020

CARES ACT 2020

Coronavirus Aid, Relief, and Economic Security Act

Paycheck Protection Program (PPP)

SBA LOAN THROUGH LOCAL BANK SMALL BUSINESSES WITH LESS THAN 500 EMPLOYEES $350 BILLION PROVIDED 2.5 TIMES AVERAGE MONTHLY PAYROLL COSTS FOR 1-YEAR PERIOD NO PERSONAL GUARANTY OR COLLATERAL REQUIRED

“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

• utside the US

LOAN AMOUNT DETERMINATION

Average monthly payroll multiplied by 2.5

Loan Forgiveness

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 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.

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

FTE in June 2020. If amount of FTE is lower in 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 years 0.5%

Example

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 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

https://www.injoy stewardship.com/c ares-act

1

https://www.drop box.com/s/yzw0ls 1nrmzyxqi/CARES %20Act%20PPP%2 0Calculation.xlsx? dl=0

2

https://www.churc hlawandtax.com/w eb/2020/march/w hat-cares-act- means-for- churches-and- church-staff.html

3

https://www.shrm.

• rg/resourcesandt
• ols/tools-and-

samples/hr- qa/pages/calculate ftehours.aspx

4

Action items

GET PREPARED. GATHER

• DOCUMENTATION. DO THE
• MATH. KNOW YOUR

NUMBER. CALL YOUR LOCAL BANK WHERE YOU HAVE YOUR BUSINESS CHECKING ACCOUNT.

BE READY! APRIL 3RD