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Updates 

COVID-19 Response

 

 

May18, 2020

PPP Forgiveness Update

 

Most of you are in the process of paying bills in your 8 week forgiveness period.  As you know, payroll and covered expenses paid during this period can be applied towards PPP loan forgiveness.

 

The SBA just came out with their Loan Forgiveness Application. We wanted to reach out and let you know that guidance on forgiveness from SBA is still lacking and lawmakers and administration officials are expected to make more revisions this week. There is talk about extending the 8-week period to allow for more flexibility. For the time being we will continue to plan forgiveness as outlined in the application.

 

Here is the Loan Forgiveness Application as released from the SBA on Friday for your review.

 

Ultimately, it will be the lenders (with the SBA) who will determine what portion of the loan is forgiven. It would appear the borrower will be submitting the completed application for forgiveness to the lender.

 

One critical element for most of you is you did not start back to work and pay staff right at the outset of the PPP loan disbursement due to mandatory office closures.  Most left their employees on unemployment since the business was not open.  A provision in the CARES Act regarding forgiveness requires that to get full forgiveness the employer needs to have the same size staff (FTE-full time equivalent) in place during the 8 weeks as there were prior to COVID-19.  In the above scenario, that won't happen. There is a provision in the law that overrides that requirement and allows full forgiveness assuming the same number of FTE employees on payroll pre-COVID-19 are employed again by June 30th. How long after June 30th must those same employees remain? The law does not address that question.  This is a simplified description of the issue and we want you to be aware of it as you navigate through this process. Keep in mind, if lawmakers extend the 8-week period the above will change dramatically.

 

There are a number of significant questions about forgiveness remaining to be clarified.  We believe it will be a messy process and it's conceivable (and likely) different lenders will have different interpretations. More guidance and clarification and perhaps new law from SBA, Treasury, and Congress is needed and probably forthcoming.

 

Know that we are vigilant in staying updated as new information becomes available. We will do our best to keep you apprised through emails and our website.

 

Tony Nitti writes a great article on the forgiveness application that was just released. I am sharing that with you below because it gives you a good idea how complex this whole process is.

Forbes article on Loan Forgiveness

 

 

March 31, 2020

8:15 pm

A sample application for the Payroll Protection Program loan has been posted on the SBA website and additional information on the PPP loan has been posted. It appears some of the terms of the loan have changed. Applications will be accepted starting Friday, April 3, 2020. Check with your bank to see if they are processing these loans.  

SBA sample PPP application 

SBA PPP webpage

7am

The SBA just issued a press release. SBA lenders should be able to accept applications for the PPP 7(a) loans on Friday, April 3, 2020.

SBA press release

 

March 30, 2020

5:00 pm

Today Treasury Secretary Mnuchin said the SBA site would be updated with details on what documents you would need to apply for the 7(a) loan and instructions. This afternoon the SBA website was updated and a section called the Paycheck Protection Program was addedHowever, as of now, there are no details on what paperwork you will need. He also said that beginning Friday, business owners can go to (I am hopeful this can be done remotely) any existing SBA lender, as well as any FDIC insured institution that has signed up for the program, and apply for the loan. 

SBA-Paycheck Protection Program 

12 noon

I also want to pass along an information  sheet on the CARES Act SBA 7(a) loan that the ADA has put out. This information sheet gives a great explanation on how to apply for the loan, what  Information you need and how the loan will be forgiven. 

ADA information sheet on SBA 7(a) loans

We have been in contact with a couple of our SBA lenders and as of this morning they did not have any additional information to process these loans. They expected to receive something from the SBA this afternoon or tomorrow morning. We will keep you posted as we find new information. 

If you still have questions on how this all with fit together with your practice, please give Mike, Tammy or David a call, or you can reach out to them via email.

mike@haascpa.com

tammy@haascpa.com

dhaas@haascpa.com

 

 

March 29, 2020

 

The SBA loan that has loan forgiveness provisions is called the SBA (7a) Paycheck Protection Program. This funding is available through your local SBA lender and then will be expanded to other lending institutions.  The SBA is currently drafting guidelines for the lenders, and we should know more this week. Some of what we know is:

The amount you can borrow is based on the previous 12 months of payroll looking back from the loan date. It limits each individual on your payroll to $100,000 of wages for this 12-month period. It appears that net profit from Sole Proprietorships and Partnerships can be added to this payroll with a maximum of $100,000 per partner or proprietor.  We cannot determine yet how they are going to treat  S-Corps. They might just allow the wages that are reported in the Corporation. I am sure more clarification on this will be coming.  

The maximum loan amount appears to be 2 1/2 times the monthly average of this calculated 12-month payroll figure and other payroll related expenses. The lender will have a list of required information and will request documentation from you.

The debt forgiveness calculations will look at the 8-week period following the loan. They will total the allowed expenses and that will be your maximum debt forgiveness. This forgiveness is limited to the loan amount itself, so you can't go below zero. 

The maximum debt forgiveness figure will be adjusted down if you have decreased the number of full time equivalent (FTE) employees during this 8-week window.  Essentially, they want you to maintain the same FTE employees you had before this disaster specifically during this 8-week period subsequent to the loan.

Based on the calculation above and based on what we know this moment, it looks like if you are not going to be paying your staff immediately after obtaining your loan, you are likely going to lose some debt forgiveness. 

This is a very brief summary and there are many more details and further questions to be answered over the coming weeks and timing decisions of when to secure your loan.  

Here is an article from Forbes that talks about some of these provisions.

 

 

March 28, 2020

 
The past few days have been crazy! With the passing of the CARES Act yesterday more Federal resources will be available to help keep your business viable. This was just passed, and further details will come out over the next few days and weeks. Preliminary, this is what we think we know about the FFCRA and the CARES Act and how it may work. We don’t know all the nuances related to these acts, but it gives you a direction to move forward. Your banker and your payroll service are important parts of this equation and they will be your best resource for future details and changes.  As you can imagine, we are going through this same process and will keep you informed with the new information we receive. Feel free to share with us what information you find out. We are all in this together and the more we all know the more seamless the process will be.  


What to do as of now:
  •  If your employees are not on furlough or unemployment, call your payroll service and get instructions on how to submit your payroll with Emergency Paid Sick Leave and Emergency Family and Medical Leave. We are not clear yet how the Emergency Sick Leave and unemployment benefits coordinate.
  • Call your regular lender to determine if they will be able to get you the new SBA 7a loan with “loan forgiveness” provisions (if not, can they recommend another lender – call us if you need a referral). Funds from this loan should be available in a few weeks.
  • Start gathering the SBA loan documentation your lender will need.  These are outlined in the Foley & Lardner LLP and Collier & Associates articles. Some of the documents include payroll reports, paid retirement plan calculations and proof of funding, and paid health insurance premiums.
  • If you feel like you will need additional funds, apply for an Economic Disaster loan through the SBA. This is a time consuming and difficult process.
 
You may want to listen to the ADA Webinar
 
Here is a recap of the FFCRA Act

Emergency Family and Medical Leave: Employees can now take up to 12 weeks of job protected leave-2 weeks unpaid followed by 10 weeks of paid leave (at up to two-thirds of an employee's regular rate of pay and the number of hours the employee would otherwise normally be scheduled to work, not to exceed $200 per day and $10,000 in the aggregate). This applies if they are unable to work (including by telecommuting) due to a need to care for a child whose school or childcare provider is closed or unavailable due to the Coronavirus outbreak.
 
Emergency Paid Sick Leave:  If employees are subject to a federal, state, or local quarantine or isolation order ("isolation order") related to COVID-19 (or have COVID-19 or are caring for a family member with COVID-19). Employers must offer employees 80 hours of paid sick leave (up to a maximum of $511 per day ($5,110 total). Part-time employees are eligible for the number of hours equal to the average hours worked over a two-week period.
 
Paid Leave Tax Credits: To help bear the cost of the new paid-leave requirements, employers can offset the amounts paid above from employment taxes and otherwise seek refunds additional payments.  Credits are increased by the portion of the employer's "qualified health plan expenses" that are properly allowable to qualified sick leave wages or qualified family and medical leave wages.

 

 

March 27, 2020

10:40

House Passes $2 Trillion Coronavirus Stimulus Package

Now we wait for all the details to come out. 

9 am

Collier & Associates, a national consulting firm for doctors, has put out a Q & A on the CARES Act. All details are still not available, but this gives you an idea of the direction of the Act.

Q & A on CARES Act financing 

ADP fact sheet on Families First Act

Q & A from ADP

 

6:00 am

The Department of Labor has released the Employee Rights Poster which should be sent to your staff or posted. The Families First Conronavirus Response Act (FFCRA) requires certain employers to provide paid sick leave and expanded family and medical leave. Below are links to the poster and a fact sheet from the Department of Labor.

Employee Rights Poster

Fact Sheet of the FFCRA from the Department of Labor

The State of California's  COVID-19 Response web page has a lot of helpful information.  Here is some information on how to Get Financial Help-in California in addition to information on 90-day relief on mortgage payments, emergency sick leave, paid family leave and Unemployment Insurance.

 

March 26, 2020

 

5:34 pm

We have received some feedback from some regional lenders. It seems there will be some guaranteed loans available through banks. These are different loans than the SBA loans that are available to apply for online. They do not have all the details and hope to have more information tomorrow or Monday. 

This is new and developing. Keep checking in for more updates. 

For some light reading tonight, here is a link to the Cares Act. 

880 Pages Cares Act

12:00 pm

It looks like there are going to be several options regarding Small Business Loans. We have left several messages with our local bankers to get more information. As details emerge we will keep this site updated.

Here is an article from the Wall Street Journal regarding applying for loans.

How to Apply for SBA loans under the Coronavirus Stimulus Bill

 

March 25, 2020

Gavin Newsom announced a 90-day California mortgage grace period. Wells Fargo, Citibank, JPMorgan and US Bank have agreed to this grace period. This is still developing. Ask you lender about their policy.

Proposed Coronavirus Aid Relief and Economic Security Act. A $2 trillion stimulus package that provides financial assistance and relief to workers and businesses impacted by the coronavirus pandemic has passed.  Specific terms are not yet available.  Some key elements of the bill are:

$300 Billion of guaranteed loans distributed thru the SBA

Some loans or portions of the loans will have provisions to be forgiven. Here is an article from the Wall Street Journal that explains some of these provisions.

To apply online please visit this link::    SBA Disaster Loan Webpage

Wall Street Journal Article  

 

Direct Payments

Americans making up to $75,000/year would receive checks for $1,200. Couples making up to $150,000/year would receive $2,400, with an additional $500 per child.  The payments would decrease for those making more than $75,000/year, with an income cap of $99,000/year per individual or $198,000/year for couples.
 
Expanded Unemployment Benefits

The legislation would significantly boost unemployment insurance benefits, expanding eligibility and offering workers an additional $600 a week for four months, on top of what state unemployment programs pay.  Benefits would also be extended to workers who typically do not qualify, such as furloughed employees and freelancers.
 
 

March 24, 2020

We have been receiving a lot of questions regarding available financial assistance and the Family First Coronavirus Response Act. The details of these are still developing and we are trying to stay up to date on all clarifications as they are published. Below we have tried to answer some of your questions and provide you with useful links. Keep checking this site as we update it regularly in hope to keep you informed.

 

Some Questions & Answers

 

Extensions for IRAs and HSA Contributions as well as Pensions Plans

You now have until July 15th to fund your HSAs, IRAs and business pension plans for tax year 2019.     See the link below for a Q & A from the IRS for more details.

IRS Q & A on filing and payment and deadlines

Is there any Federal financing available?

The U.S. Small Business Administration (SBA) Economic Injury Disaster Loans are available to provide working capital to small businesses. We are expecting new legislation to provide additional small business loans. 

To apply online please visit this link:SBA Disaster loan Webpage

Here is a fact sheet from the SBA regarding this financing  

SBA loan fact sheet

 

How does the Family First COVID-19 Response Act Work?

The US Treasury Department, the IRS and the Labor Department have announced that small and midsize businesses can get payroll tax credits to provide for Coronavirus related leave. The credits will be immediate through reductions in payroll tax deposits and are designed to reimburse employers for 100% of paid sick and family leave subject to limitations. 

Here is the News Release from the IRS which explains the preliminary details to these tax credits. More clarification is expected by April 1st.

IRS News Release on COVID-19 paid leave

 

This article explains the sick leave and family leave well. Things are getting clarified daily and we will keep you posted.

California Chamber article on Family First Response Act

 

We are getting a lot of questions about the above. Please know that you will have to submit to your payroll provider information that complies with the Act. You should contact your payroll provider and see their website for instructions.

Here is a link to ADP’s COVID-19 Small Business Resource Center

Covid-19 Small Business Resource Center

 

What are Health Insurance Companies doing about insurance premium payments that are due?

Insurance companies are addressing this now and the solution is developing. We will update this site as we get more information.

 

Can I get a 90-day forbearance on my mortgage or business loans?

Many lenders are working with their clients to facilitate this. Call or email your lender and make arrangements. There is talk that new legislation will include an automatic 90-day forbearance on mortgages. Again, this is still developing, and we will keep you posted.

Are my Real Estate Taxes still due April 10th?

We have heard from Sonoma County regarding this. They have informed us that it is up to the State to extend the deadline. The counties do however have the ability to waive penalties and interest if the payment is late due to “reasonable cause and circumstances beyond the taxpayer’s control”. You would have to contact your county Tax Collector to get further information.

 


 

You can reach us via email through the “About Us” page on this site or you can leave a message using the telephone tree. We will be checking our emails and messages regularly.

Please keep in mind that there may be delays, especially as we make adjustments to our processes and procedures to allow our staff to work remotely. We apologize for any inconvenience this may cause you.

If you would like to send us your organizer or documents, please scan and email to mmurphy@haascpa.com or click here to securely upload. 

We appreciate your understanding as we work through this global pandemic and appreciate your continued partnership!

Thank you and stay safe!

Telephone

415.382.1040

707.603.4227

Fax

707.765.4411

 

Haas & Reaney, LLP

3835 Cypress Drive

Suite 204

Petaluma, CA 94954

 

 

You can also send us a message directly through the About Us page of this website.