Paycheck Protection Program Obtainable Path to Loan Forgiveness - - PowerPoint PPT Presentation

Surviving COVID-19

Welcome!

Today’s event will be starting shortly.

“Obtainable” Path to Loan Forgiveness

Paycheck Protection Program

Jim Laube

Your Hosts

Joe Erickson Anne Gannon, CPA

The Largo Group

The information provided on this webinar does not, and is not intended to, constitute legal or accounting advice; instead, all information, content, and materials available on this webinar are for general informational purposes only. Attendees of this webinar should contact their attorney or accountant to

• btain advice with respect to any particular legal matter. No attendee or viewer of this webinar should

act or refrain from acting on the basis of information on this webinar without first seeking legal or accounting advice from counsel in the relevant jurisdiction. Only your individual attorney or accountant can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. All liability with respect to actions taken or not taken based on the contents of this webinar are hereby expressly disclaimed. The content on this webinar is provided "as is;" no representations are made that the content is error-free.

Disclaimer

Paycheck Protection Program

Consult with your lender and the Small Business Administration

• Interactive format
• Access to participant comments

& questions

• This webinar is being recorded
• Links to resources will be

included on the recorded webinar page

Webinar Format

Paycheck Protection Program

PLEASE PARTICIPATE! Collaboration is VERY powerful!

Questions & Comments

Show/Hide Control Panel Questions Tab Type your Questions / Comments

Paycheck Protection Program

PPP Flexibility Act of 2020

Paycheck Protection Program Key Changes

• Extends the Safe Harbor date to December 31, 2020
• Lengthens the payback period from 2 to 5 years
• Stretches the forgiveness period to 24 weeks
• Allows option to stay with 8-week forgiveness period
• Additional FTE exemptions based on business activity
• Change in use of funds requirement to 60% payroll and 40% covered non-

payroll expenses

• Allows delayed payment of employer payroll taxes

Paycheck Protection Program

Anne Gannon

CPA, The Largo Group

www.thelargogroup.com

PPP Bootcamp

Anne E. Gannon, CPA Principal The Largo Group, Inc.

NEW RULES - AGAIN

 60% Payroll  24 weeks – 4 more months to spend money  NEW FORGIVENESS APPLICATION  Ability to defer payroll taxes  Safe harbor now 12.31.20  Extend deferral period for borrower payments to the date that SBA remits

loan forgiveness to lender OR 10 months after the end of the covered period if borrower does not apply for forgiveness

What about FTE?

Safe Harbor now 12/31/2020 with additional exceptions for:

• 1. Sales not returning to pre-covid levels
• 2. Lack of qualified candidates
• 3. Employees who left voluntarily
• 4. Employees who requested reduction in hours

Additional information expected to be released any day, but with 12/31/2020 FTE focus has shifted significantly!

Making new rules work for your business…

Scenario:

Received Funds: April 1, 2020 Total PPP Loan: $200,000

• Step 1: Calculate amount spent to date on all allowable

expenses

• Rent – 2 months of $8,000 = $16,000
• Utilities – 2 months of $2,000 = $4,000
• Payroll – 6 weeks of $12,000 = $72,000
• Step 2: Calculate 60% of Total Loan - $120,000 THIS IS

MINIMUM to spend on payroll over 24 weeks

• Step 3: Calculate dollars remaining in loan:

Initial Loan $200,000 Payroll 4.2 – 6.10 $72,000 Utilities/Rent 4.2 – 6.10 $20,000 Amount remaining: $108,000

June 10th is a brand new day in PPP

Calculate plan moving forward: Additional payroll needed to fulfill 60% -

• Payroll to date $72,000 –
• Payroll required to meet 60% - $120,000
• Payroll Dollars remaining: $48,000
• HOW MUCH PAYROLL DO I NEED TO RUN MY

BUSINESS BASED ON CURRENT OPERATIONS???

Building an efficient labor plan…

Average weekly sales in May $15,000 Labor % pre-covid (excluding taxes and insurance) 30% New Weekly Labor $4,500 Remaining weeks of payroll ($48,000/4500) 11 WEEKS at least – could be more based on total dollars remaining

Building efficient budget with remaining PPP dollars:

Amount remaining as of 6/10 $108,000 Rent/Utilities Monthly $10,000 Remaining months (4) $40,000

Planning for 70% revenue does not have to mean lost PROFIT

$- $10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00 $70,000.00 $80,000.00 $90,000.00 $100,000.00 June July August September

Revenue Trends 2018 - 2020

2018 2019 2020

Managing Prime Cost Trends KEY to profitability COST OF GOODS + LABOR = 55%

0.62 0.7 0.68 0.65 0.64 0.68 0.63 0.66 0.62 0.62 0.62 0.62 JUNE JULY AUG UST SE P T E M BE R

PRIME COST TRENDS

2018 2019 2020

Build Budget for next 4 months

June July August September Revenue $60,000.00 $60,000.00 $60,000.00 $60,000.00 COGS $19,200.00 $19,200.00 $19,200.00 $19,200.00 Labor $18,000.00 $18,000.00 $18,000.00 $18,000.00 Operating Expenses Rent/Utilities $10,000.00 $10,000.00 $10,000.00 $10,000.00 Operating Other $10,000.00 $10,000.00 $10,000.00 $10,000.00 Net Income $2,800.00 $2,800.00 $2,800.00 $2,800.00

2019 monthly labor $30,000 but with sales down – revised monthly labor target is $18,000 THIS GIVES ME MORE WEEKS WITH PPP FUNDS

BUILD BUDGET WITH PPP Funds

June July August September October Revenue $60,000.00 $60,000.00 $60,000.00 $60,000.00 COGS $19,200.00 $19,200.00 $19,200.00 $19,200.00 Labor $18,000.00 $18,000.00 $18,000.00 $18,000.00 PPP Adjustment

• $18,000.00
• $18,000.00
• $18,000.00
• $18,000.00

Operating Expenses Rent/Utilities $10,000.00 $10,000.00 $10,000.00 $10,000.00 PPP Adjustment

• $10,000.00
• $10,000.00
• $10,000.00
• $6,000.00

Operating Other $10,000.00 $10,000.00 $10,000.00 $10,000.00 Net Income $30,800.00 $30,800.00 $30,800.00 $26,800.00

Total PPP funds to use $108,000 Assume September PPP rent adjusted to $6,000 Without improved labor – PPP would end in July/August

Regardless of sales – margins are key!

Total 2019 Revenue $240,000 $650,000 COGS $76,800 32.00% $227,500 35.00% Labor $72,000 30.00% $260,000 40.00% PPP Adjustment

• $72,000

Operating Expenses Rent/Utilities $40,000 $40,000 PPP Adjustment

• $36,000

Operating Other $40,000 $82,000 Net Income $119,200 49.67% $40,500 6.23%

PPP Dollars $108,000 included in bottom line

Managing margins with lower sales can have big impact on bottom line!

$(10,000.00) $(5,000.00) $- $5,000.00 $10,000.00 $15,000.00 $20,000.00 $25,000.00 $30,000.00 $35,000.00 June July August September

Net Income Trends

2018 2019 2020 with 62% and PPP 2020 with old margins 2020 with SAME LABOR

Detailed Plan for spending remaining PPP Dollars:

PPP 4.2 – 6.10 6.10 – 9.30 Labor $72,000 $72,000 ($4,500/week) Utilities/Rent $20,000 $36,000 (3.5 months) Total $92,000 $108,000

Resources:

Post Covid-19 Cash Flow Mastermind Session with David Scott Peters Thursday, June 18th at 12pm Eastern www.thelargogroup.com/store

Thank You

Anne E. Gannon, CPA One Boston Place, Suite 2600 Principal Boston, MA 02108 The Largo Group, Inc. agannon@thelargogroup.com www.thelargogroup.com 617-202-6674

PPP Loan Forgiveness

Paycheck Protection Program Do these changes make it possible for you to get total loan forgiveness?

FTE Calculations

Average FTE: This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period. For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.

Paycheck Protection Program

FTE Calculations

Forgiveness Application Resources

Paycheck Protection Program

Download FTE Calculator

www.restaurantowner.com/ppp

PPP Resources Page

▪ Links to SBA resources ▪ Webinar recording ▪ FAQs ▪ Downloads ▪ Financial assistance info www.restaurantowner.com/ppp

Forgiveness Application Resources

Paycheck Protection Program

Download Recall Letter Template

www.restaurantowner.com/ppp

Forgiveness Application Resources

Paycheck Protection Program

Download Document List

www.restaurantowner.com/ppp

Forgiveness Application Resources

www.restaurantowner.com/snip/441.htm

FTE Restoration

Paycheck Protection Program What percentage of FTEs you had before Covid-19 do you think will be restored by December 31st?

Q&A

Questions

Additional questions to info@restaurantowner.com

Special COVID19 Resources Page

▪ Survey results ▪ Webinar recordings & notices ▪ Industry resources ▪ Financial assistance info ▪ Updated daily www.restaurantowner.com/covid19 www.restaurantowner.com/virus

Just 4 very short questions!

Please Give Us Your Feedback

Surviving COVID-19

Paycheck Protection Program

info@RestaurantOwner.com

Thank you for attending!

“Obtainable” Path to Loan Forgiveness