PPP Funding, Modifications to HR and Payroll Systems & IRS Draft Version 941

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PPP: Maximizing Loan Forgiveness
Presentationfor Net at Work Webinar
May 15, 2020
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▪ Eligible Expenditures
▪ Maximizing YourForgiveness
▪ Tracking PPPFunds
Today’s Topics

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▪ While we know the PPPrules very well, there are no experts
▪ New guidance comesoutdaily
▪ This is new toeveryone and theSBA has not issuedguidance on several items
o We’re “building a plane after we’ve taken off”
Today’s PPP Environment

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▪ Salary Up to$100K (including owners & partners) for FTE’s
o Including vacation, sick, family, bereavement, stipends, etc.
o Lenders may consider other factors such as seasonality
▪ ERcontributionstoretirementsplans
▪ ERpayments for EEbenefits (medical, dental, vision)
▪ State& localtaxes assessedon EEcompensation
▪ Totalcostsmustbe 75% of the forgiveness amount
Eligible Expenditures (Payroll)

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▪ (Assuming)an FTEworks30hours per week
▪ Combine employees’ hourswho workless (2EE at 15hours/week= 1FTE)
▪ Forgivenesstracking: bythe position, not the person (for replacementhires)
▪ EE’swho refuseto be re-hired:
o Borrower must makea good faith offer to rehire
o Make sure the EE rejection of the offer is in writing
o EE is at risk to forfeit eligibility for continued unemployment compensation
▪ If you use a PEO,the company’s employees will not be consideredemployeesof the PEO
Eligible Expenditures (FTEs)

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▪ Rent
▪ Mortgage interest
▪ Utilities, including internet,gas, electric
Eligible Expenditures (Non-Payroll)

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▪ Itemsthatwill reduceyour forgiveness
o Less than 75% of PPP funds are spent on payroll
o Payroll costs are less than 75% of the prior quarter
o Employing fewer FTE’s than the base period (and not remedied by June 30)
▪ Important:It is not“all or nothing.”It’sa reduction.
Maximizing Forgiveness

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The easier it is for the bank to review the supporting documents, the more (will likely) be forgiven
▪ The 8-weeks clock begins when the funds hit your bank account – pay allitems during that period.
There is no guidance on payroll-cycles and you might have to run a “special payroll”
▪ Consider keeping the funds in a separate bank account
▪ Have your payroll provider create new payroll codes
▪ Cost must be incurred AND paid
▪ Have a spreadsheet, and a supporting document for each item
▪ Provide bank statement showing the money left your account
Tracking PPP Expenses

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Sample Tracking Spreadsheet

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▪ Calculations are the responsibilityof the borrower.
▪ Lenders are expected toperform a “good faith review” of thecalculation and
supporting documents.
▪ Provide the lender a statementthat SBA will only audit forgiveness of loans in excess
of $2M.
▪ When applying, you statedthat “The current economic uncertainty makes the loan
request necessary to support the ongoing operations of the borrower/company.”
▪ Borrowers shouldhave their external CPAattestthat their PPPexpensesare accurate,
or give thelender a statement(letter)that they have properly complied with the
program rules.
Be A “Model Citizen”

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▪ Bulls win. Bears win. Pigs lose.
o Bad optics for the bank – be practical
o Don’tprepayrent. Don’tpaybonuses.
▪ Costmustbe incurred ANDpaid
▪ We’re waiting for guidance on that (payroll cycles)
▪ We’re not sureof Congress’intent
▪ That has notbeen defined yet (utilities)
Answers To All Your Questions

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Q&A

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For more information, contact
William Lieberman, Founder & Managing Partner
william@tcrh.co
Eric Meisner, COO and Partner
eric@tcrh.co
(646) 277-8728 ext. 701
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