SLIDE 1
NAVIGATING CARES ACT LOAN PROGRAMS The information provided is - - PowerPoint PPT Presentation
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
SLIDE 2
SLIDE 3
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.
SLIDE 4
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
SLIDE 5
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
SLIDE 6
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
- r 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,
- r net earnings from self-employment
SLIDE 7
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) LOAN FORMULA
SLIDE 8
PAYROLL PROTECTION PROGRAM (PPP) APPLICATION PROCESS
Loan applications will be made to your SBA Lender – there are multiple versions
- f 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
SLIDE 9
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
SLIDE 10
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.
SLIDE 11
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.
SLIDE 12
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.
SLIDE 13
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
SLIDE 14
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