TRACKING YOUR PPP LOAN FORGIVENESS New SBA Guidance and Reporting - - PowerPoint PPT Presentation

New SBA Guidance and Reporting

TRACKING YOUR PPP LOAN FORGIVENESS

DREW SCHILDWACHTER

Drew has worn many hats over the years as a contractor, video retail multi-unit franchisee partner and

• perations director – commercial sign

company owner and most currently,

• perations leader at ConnectPay.

MATT VENUTO

Over the last decade through insurance and payroll, Matt has worked with thousands of businesses.

RICHARD KING

Directing our team of developers, Richard is always improving ConnectPay’s proprietary payroll platform to ensure accurate payroll and tax compliance when laws change and new programs are introduced.

Agenda

Overview Main Topics Simplified 8-week period Incurred or Paid FTE Calculation Defined Magic June 30 Date Confirmed New Forgiveness Calculation and Worksheet FTE Reduction Safe Harbor Owner Compensation Increases Prohibited Documents Required for Recordkeeping Reports Q&A

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Help Us Help You Better

If you do ask a question – if you could please provide this info:

• What is the industry that your business in?
• How many employees do you have?
• How often do you pay them?
• What has been the revenue impact on your business?
• When did you received your PPP Loan?

(Example: Service station, 5 employees, bi-weekly, significant - revenue down 30%, funded May 1st) This will help us more accurately answer your question, and conserve time.

Tool that we will provide you

DOWNLOAD NOW

PPP Covered Period Worksheet

The new guidance allows borrowers to use an 8-week covered period beginning with the loan disbursement date OR an “Alternative Payroll Covered Period” that aligns with the borrower’s regular pay cycles. 1. Start by marking the date that your PPP loan was

• funded. That is the beginning of your 56 day

Covered Period for all non-payroll expenses. 2. If that fund date is in the middle of a payroll cycle borrowers with weekly or bi-weekly payroll may elect to calculate the 8 week period at the beginning of the first day of their next payroll

• cycle. Semi-Monthly and Monthly cycles are

excluded.

SIMPLIFIED 8-WEEK PERIOD

PPP Covered Period Worksheet

Borrowers can include eligible payroll and non-payroll costs paid OR incurred during the 8-week period of their choosing. This should remove the need to accelerate pay dates or alter your regular pay schedule.

INCURRED OR PAID

• Count payroll cost that were both paid and incurred only once
• Count non payroll cost that were paid and incurred only once
• Eligible non payroll costs cannot exceed 25 % of total forgiveness

amount

Full Time Method: The SBA has defined full-time equivalents as employees working at least 40 hours. Less than Full Time Method:

• 1. To make it even easier the SBA created a simplified method to

calculate FTEs: each employee working at least 40 hours a week equals 1 FTE; each employee working under 40 hours a week equals 0.5 FTE.

• 2. Alternatively, borrowers can enter the average number of hours paid

per week for each employee during the Covered Period or the Alternative Payroll Covered Period, divide by 40, and round the total to the nearest tenth with the maximum capped at 1.0.

FTE DEFINED CALCULATION

Average number of hours paid per week for each employee

/

40

FTEs

Regardless of the 8-week period chosen, reduced FTEs and pay rate reductions in excess of 25% (for employees earning less than $100k annually) must be restored by June 30th to maximize forgiveness

MAGIC JUNE 30 DATE CONFIRMED

EXCESS

25%

Potential forgiveness amounts

• Modified Total: Payroll costs + non-payroll costs - total

hourly/salary wage reductions * FTE reduction quotient

• PPP loan amount
• 75% of your payroll costs

NEW FORGIVENESS CALCULATION

Employees who are fired for cause, voluntarily resign, or request reduced hours during the 8-week Covered Period or Alternative Payroll Covered Period will still count as an FTE. It is very important to document each incident. This includes

• ffers to return to work by employees collecting unemployment.

FTE REDUCTION SAFE HARBOR

Owner compensation cannot exceed $15,385 or the 8-week equivalent of their applicable 2019 compensation during the 8-week covered period, whichever is lower. However, employees can have $15,385 of compensation and additionally the employers’ share of Group Health plan and retirement match can be included.

OWNER COMPENSATION INCREASES PROHIBITED

You can find the detailed list of documents in the forgiveness application but you can expect to prepare:

• PPP Loan Forgiveness Calculation Form
• PPP Schedule A
• Payroll documentation:

○ Bank Statements ○ Tax forms ○ Receipts or account statements documenting employer contributions to health insurance and retirement plans

• FTE documentation

○ Payroll tax filings ○ Employee wage reportings or unemployment insurance tax filings

• Nonpayroll documentation

○ Documentation verifying the existence of the

• bligations/services prior to February 15, 2020 and eligible

payments from the Covered Period

OVERVIEW DOCUMENTS REQUIRED FOR FORGIVENESS APPLICATION

• Certifications on Behalf of the Borrower

This is on Page 4 of the application. Please read this page carefully.

• Optional Demographic information (Page 11)
• Payroll reports
• Payroll Summary
• Payroll Journals
• Group Health Plan and Retirement contributions by employers
• Bank Statements
• Payroll tax filings - Form 941(s)
• Unemployment tax filings
• Backup documentation for FTE calculations
• Receipts, cancelled checks or statements - For lease and utility

payments

• Loan and lease agreements or statements

DOCUMENTS REQUIRED FOR SUBMISSION: FORM 3508

Documents that should be maintained but not submitted:

• Calculation of wages and FTE for each employee including wage

reduction calculations and limiting to $15,385.

• Documentation of qualified employee reductions (Refusal to

return, voluntary resignations and voluntary reduction in hours).

• Safe Harbor FTE calculations

Retain all files for 6 years after the date the loan is forgiven and/or paid in

• full. Provide access to files upon request.

DOCUMENTS REQUIRED TO BE MAINTAINED BUT NOT SUBMITTED

• Documents should be managed and maintained assuming an SBA

audit.

• Most banks are telling us that they will utilize a digital application

and won’t accept the paper application.

• Backup documents should be kept for all calculations made as a

part of the forgiveness application process.

• Internal controls should be maintained and memo of assumptions

and interpretations. These should be dated. Retain all files for 6 years after the date the loan is forgiven and/or paid in

• full. Provide access to files upon request.

RECORDKEEPING

What to get started on now to make the process manageable, and make sure good records are kept. The forgiveness loan submission will likely be digital. So, supporting documents will need to be in PDF or Word format to upload during the loan application stage. It is best to begin to

• rganize those documents as we wait for

further guidance and updates.

GETTING STARTED WITH RECORDKEEPING

DOWNLOAD NOW

Forgiveness Calculator provided by CBIZ

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Reports

ConnectPay will provide our clients with a data feed report, which includes the detailed numbers for the Payroll Costs, FTE Calculations and the Salary/Hourly Wage Reduction Calculation needed for Schedule A.

Paycheck Protection Program Payroll Cost Report

Paycheck Protection Program Payroll Cost Report

Report period: month dd, yyyy - month dd, yyyy Month/Year Employee Earnings + Employer State & Local Taxes + Employer Health Deduction + Employer Retirement Contribution

• Employee

Federal Taxes = Payroll Cost Totals

Paycheck Protection Program Payroll Cost Report

ConnectPay HR Resource Center

Every ConnectPay customer receives 6 months of free access to our HR Portal. Contact us for a free demo to see how this program can help you run your business. LEARN MORE:

ConnectPayUSA.com/hr

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Reduce Employees' Risk of COVID-19 Exposure in the Workplace

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DOWNLOAD NOW

PPP Covered Period Worksheet Forgiveness Calculator provided by CBIZ

DOWNLOAD NOW

QUESTIONS & ANSWERS

DREW SCHILDWACHTER

drew@ConnectPayUSA.com (617) 360.1352

MATT VENUTO

mvenuto@ConnectPayUSA.com (781) 941.6107

RICHARD KING

rking@ConnectPayUSA.com (774) 300.8926

THANK YOU!

References

SBA PPP Loan Forgiveness Application Information https://home.treasury.gov/news/press-releases/sm1010 PPP Loan Forgiveness Application https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgive ness-Application.pdf ConnectPay Webinar Resources https://connectpayusa.com/navigating-small-business-payroll-during-covid-19-webinar-res

• urces/?et_fb=1&PageSpeed=off

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