NAVIGATING CARES ACT LOAN PROGRAMS The information provided is - PowerPoint PPT Presentation

NAVIGATING CARES ACT LOAN PROGRAMS

The information provided is based on the CARES Act and SBA Guidance released as of April 4, 2020. Additional changes may occur as the program evolves

CARES ACT 349 billion allocated to help small businesses keep workers employed during the  pandemic and economic downturn. The legislation provides small business job retention loans to help small businesses with their payroll and certain overhead expenses to keep workers employed. Much of this support will be administered by the Small Business Administration (SBA) The Paycheck Protection Program (PPP) is a public-private partnership utilizing  approved SBA lenders to process requests. The Economic Injury Disaster Loan Program (EIDL) is a direct SBA initiative. 

PAYROLL PROTECTION PROGRAM (PPP) ELIGIBILITY Small businesses with 500 or fewer employees are eligible  Not-for-profit 501(c)3 and select others  Sole proprietorships  Self-employed individuals  Independent contractors 

PAYROLL PROTECTION PROGRAM (PPP) LOAN FEATURES Amount - Loan amounts up to $10 Million  Calculator - 2 .5 X monthly payroll – caps on eligible payroll for highly paid  employees at $100,000 Rate - 1.0% fixed rate, regardless of business type  Term – no payment for first 6 months, then 2 year loan  No personal guarantee or collateral required  No prepayment penalties or fees  Forgiveness – up to 100% of loan can be forgiven if criteria are met 

PAYROLL PROTECTION PROGRAM (PPP) LOAN FORMULA Most applicants will use average monthly payroll for 2019; seasonal and new  business use adjusted calculation Individual employees capped $100,000 annualized  Salary, wages, commissions, tips  Costs for sick, vacation, parental, family medical leave; allowance for separation  or dismissal; provisions of group health care benefits including insurance premiums; retirement benefits State and local taxes assessed on compensation  Add any outstanding amount of EIDL loan, less any advance  For sole proprietorship or independent contractor: wages, commission, income,  or net earnings from self-employment

PAYROLL PROTECTION PROGRAM (PPP) LOAN FORMULA Excluded from Payroll Costs:  Annual compensation to individual employee in excess of $100,000  Certain Federal taxes imposed, such as FICA  Compensation paid to employee who is nonresident of United States  Qualified sick leave wages for which credit is allowed under Families First Act  Qualified family leave wages for which credit is allowed under Families First Act 

PAYROLL PROTECTION PROGRAM (PPP) APPLICATION PROCESS Loan applications will be made to your SBA Lender – there are multiple versions  of the application. Make sure your lender gives you most recent version 2 page application plus instructions indicating your average monthly payroll and  purpose of loan –You will certify to the government all information you provide. Each owner of 20% or more must be listed on the application including Name,  Title, Ownership %, Tax ID # and Address Authorized representative must certify in good faith on application on page 2 

PAYROLL PROTECTION PROGRAM (PPP) APPLICATION Section 1 – Business info must be accurate and complete; average monthly  payroll, loan amount requested, # of jobs Application Ownership – All owners with greater than 20% states must be listed  Questions 1-4, 8 – Business Questions, including ownership of other business  Questions 5-7 – Owner questions to be completed and initialed by authorized  representative

PAYROLL PROTECTION PROGRAM APPLICATION PROCESS Representations, Authorizations and Certifications Form Current economic uncertainty makes the loan necessary to support ongoing operations  The funds will be used to retain workers and maintain payroll or to make mortgage, lease and  utility payments 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.

PAYROLL PROTECTION PROGRAM APPLICATION PROCESS Required Documentation – Lenders will be required by the SBA to verify certain tax and payroll information used in your calculation of loan amount requested. The guidelines are forthcoming, but you should expect to be asked for: Employee payroll census as of 2/15/20  IRS Form 940 for 2019  IRS Form 941 for latest quarter  Employee payroll census for as of 12/31/19  Lender’s requirements under Bank Secrecy Act  If the SBA informs lenders of tax documentation requirements, this is subject to change.

PAYROLL PROTECTION PROGRAM (PPP) SAFETY AND SECURITY Sending Documentation Please be sure to send your documents via secure email to your lender to  protect email messages and attachments Cyber Security Be aware of fraudulent email/scams utilizing the SBA name and logo concerning  the CARES Act financing programs. These emails may ask you to click on a link for an application or ask for personal identifiable information. Do not click the link or respond in any way. Talk directly with your lender.

ECONOMIC INJURY DISASTER LOANS (EIDL) Alternative SBA loan  Amount – Up to $2 Million  Rate – 3.75% business; 2.75% non-profits  Term – Up to 30 years  No Personal guarantee on loans up to $200,000  No collateral required for loans up to $25,000 - Not disqualified if no collateral  Up to $10,000 emergency grant – advance within 3 days of application  Not required to repay emergency grant even if denied loan  If obtain PPP loan, emergency grant reduced from loan foregiveness 

Q&A & CONTACTS Bill Kugelman Powell & Roman, LLC Tel: 732-679-3777 Email: wkugelman@lawppl.com Ira Bernknopf Prager Metis CPAs Tel: 732-617-1100, Ext. 11372 Email: ibernknopf@pragermetis.com Hal Soden, Jr. Oliver L.E. Soden Agency Tel: 732-521-0001 Email: hwsoden@sodeninsurance.com