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© 2020 Donaldson Legal Counseling PLLC All Rights Reserved. Updated 4.6.2020
Updated Guidance
Q&A
www.attorneylawny.com
Your Presenter:
Tiffany A. Donaldson, Esq.
Donaldson Legal Counseling PLLC
Graduated from the University of Miami School of Law
Practiced Small Business Law for over 10 Years
Assists small business owners with:
- Loan Decisions
- Employee Leave Laws
- Formation
- Contracts
- Trademarks
- Employment Documentation and Hiring
Paycheck Protection
Program
Q&A
www.attorneylawny.com
CARES Act
 The Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act was signed into law
on March 27, 2020.
www.attorneylawny.com
Paycheck Protection Program
What is It?
www.attorneylawny.com
Paycheck Protection Program
 What is It?
 Modification to the SBA 7(a) Loan under the Small
Business Act (15 U.S.C. 632).
 Allows for loosened restrictions on who can
borrow, and how much;
 Allows forgiveness for a portion of the loan
www.attorneylawny.com
Who Is Eligible?
www.attorneylawny.com
Who is Eligible?
 Open during the covered period: February 15,
2020 – June 30, 2020 Any business that:
 Has 500 Employees or Less
 For-Profit Business
 Non-profit
 Veterans’ organization,
 Tribal business,
 Also. . .
www.attorneylawny.com
Who is Eligible?
 In business as of February 15, 2020
– June 30, 2020 &
 Sole Proprietor
 Independent Contractor and
 Partners of a Partnership
 LLC Owners who Work for the
Business
 S Corp Owners who get a W2 only
www.attorneylawny.com
Do I Need to Prove Losses?
Paycheck Protection Program
 No need to prove losses, just have to have been
affected generally by COVID-19 issues
www.attorneylawny.com
WHAT ARE THE LOAN TERMS?
www.attorneylawny.com
Paycheck Protection Program
 WHAT ARE THE LOAN TERMS?
 2-year maturity date
 1.0 % interest rate
 6 month deferral payments
 Interest will accrue during 6 month period
 Forgiveness of up to 8 weeks of Payroll + rent +
utilities
www.attorneylawny.com
HOW MUCH CAN I BORROW?
www.attorneylawny.com
Paycheck Protection Program
 HOW MUCH CAN I BORROW?
 2.5 times the average total monthly payments by
the applicant for “Payroll Costs”
 Not more than $10,000,000.00
 You Can Refinance EIDL
www.attorneylawny.com
What Counts As Payroll Costs?
Payroll Costs under PPP include:
 Employee Salary, wage, commission, or similar
compensation paid ($100,000.00/person annual cap)
 Payment of cash tip or equivalent
 Payment for employee vacation, parental, family,
medical, or sick leave (Not Families First Corona Virus
Response Act Leave)
 Allowance for dismissal or separation;
 Payment required for the provisions of group health
care benefits, including insurance premiums;
 Payment of any retirement benefit; or
 Payment of State or local tax assessed on the
compensation of employees
www.attorneylawny.com
How Does A Sole Proprietor Determine
his/her “Payroll?”
How Does a Sole Proprietor Determine
his/her Payroll?
 The sum of payments of any compensation to or income of
a sole proprietor or independent contractor that is a
wage, commission, income, net earnings from self-
employment, or similar compensation and that is in an
amount that is not more than $100,000 in 1 year, as
prorated for the covered period.
How Do You Calculate and “Average
Month” of Payroll?
Paycheck Protection Program
Calculating “Average Month”
 The average monthly payroll costs must be determined
from the 12-month period prior to the date the loan was
made.
 But, for those not in business as of February 15, 2019,
they may use the average payroll costs from January 1,
2020 through February 29, 2020.
www.attorneylawny.com
What Can Loan Funds Be Used On?
Uses of Loan Funds
 Expenses the business incurred from February 15, 2020
through June 30, 2020 on:
 Payroll Expenses,
 Employee salaries, commissions, or similar compensations,
 Continuation of group health care benefits during periods
of paid sick, medical, or family leave, and insurance
premiums;
 Payments of interest on any mortgage obligation;
 Rent (including rent under a lease agreement);
 Utilities;
 Interest on any other debt obligations that were incurred
before the covered period.
www.attorneylawny.com
Forgiveness
 What Can Be “Forgiven?”
Forgiveness
 During the 8-week period following the date of the loan, money used
for the following may be forgiven, subject to the reductions:
 a. Payroll costs as defined earlier at least 75% of total forgiveness
 Up to 25% of total forgiveness:
 b. Any payment of interest on any mortgage liability by the borrower
incurred prior to February 15, 2020.
 c. Rent obligated under a leasing agreement in force before
February 15, 2020;
 d. Payment for a service for the distribution of electricity, gas,
water, transportation, telephone, or internet access for which service
began before February 15, 2020.
www.attorneylawny.com
Paycheck Protection Program
Reductions
Two type of reductions are explained in the CARES Act.
#1: Total Forgiveness Average number of full-time
Eligibility Amount X equiv. employees during the 8-week pd
Avg. No. full-time equivalent
employees from Jan. 1, 2020 – Feb. 29, 2020
or
Avg. No. full-time equivalent employees
from Feb. 15, 2019 – June 30, 2019).
www.attorneylawny.com
Paycheck Protection Program
Reductions
Two type of reductions are explained in the CARES Act.
#2: Amount of loan forgiveness be reduced by the same amount as the
total amount in reduction in total salary incurred by employees over the
8-week period after the loan date.
 only applies as to employees who were making $100,000.00 or less in
2019, and
 where such decrease is over 25% of the employee’s total annual
salary, as based on the last full-quarter before the loan date.
www.attorneylawny.com
Paycheck Protection Program
Rehiring
 Can I Re-Hire to Avoid Reductions?
 If you reduced number of employees or the
salaries of employees during the time period of
Feb. 15, 2020 - April 26, 2020, you shall not be
subject to the reduction provisions if the
number of employees and amount of salaries
are returned to the levels on February 15,
2020, by June 30, 2020.
www.attorneylawny.com
Paycheck Protection Program
Deferrals
 The CARES Act allows a six-month deferral on
portions not forgiven, before borrowers are
required to begin making payments on any
principal.
www.attorneylawny.com
Seeking Professional Guidance?
Contact Donaldson Legal Counseling PLLC
counsel@dlcesq.com
www.attorneylawny.com

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Paycheck Protection Program Q & A

  • 1. © 2020 Donaldson Legal Counseling PLLC All Rights Reserved. Updated 4.6.2020 Updated Guidance Q&A
  • 2. www.attorneylawny.com Your Presenter: Tiffany A. Donaldson, Esq. Donaldson Legal Counseling PLLC Graduated from the University of Miami School of Law Practiced Small Business Law for over 10 Years Assists small business owners with: - Loan Decisions - Employee Leave Laws - Formation - Contracts - Trademarks - Employment Documentation and Hiring
  • 4. CARES Act  The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law on March 27, 2020. www.attorneylawny.com
  • 5. Paycheck Protection Program What is It? www.attorneylawny.com
  • 6. Paycheck Protection Program  What is It?  Modification to the SBA 7(a) Loan under the Small Business Act (15 U.S.C. 632).  Allows for loosened restrictions on who can borrow, and how much;  Allows forgiveness for a portion of the loan www.attorneylawny.com
  • 8. Who is Eligible?  Open during the covered period: February 15, 2020 – June 30, 2020 Any business that:  Has 500 Employees or Less  For-Profit Business  Non-profit  Veterans’ organization,  Tribal business,  Also. . . www.attorneylawny.com
  • 9. Who is Eligible?  In business as of February 15, 2020 – June 30, 2020 &  Sole Proprietor  Independent Contractor and  Partners of a Partnership  LLC Owners who Work for the Business  S Corp Owners who get a W2 only www.attorneylawny.com
  • 10. Do I Need to Prove Losses?
  • 11. Paycheck Protection Program  No need to prove losses, just have to have been affected generally by COVID-19 issues www.attorneylawny.com
  • 12. WHAT ARE THE LOAN TERMS? www.attorneylawny.com
  • 13. Paycheck Protection Program  WHAT ARE THE LOAN TERMS?  2-year maturity date  1.0 % interest rate  6 month deferral payments  Interest will accrue during 6 month period  Forgiveness of up to 8 weeks of Payroll + rent + utilities www.attorneylawny.com
  • 14. HOW MUCH CAN I BORROW? www.attorneylawny.com
  • 15. Paycheck Protection Program  HOW MUCH CAN I BORROW?  2.5 times the average total monthly payments by the applicant for “Payroll Costs”  Not more than $10,000,000.00  You Can Refinance EIDL www.attorneylawny.com
  • 16. What Counts As Payroll Costs?
  • 17. Payroll Costs under PPP include:  Employee Salary, wage, commission, or similar compensation paid ($100,000.00/person annual cap)  Payment of cash tip or equivalent  Payment for employee vacation, parental, family, medical, or sick leave (Not Families First Corona Virus Response Act Leave)  Allowance for dismissal or separation;  Payment required for the provisions of group health care benefits, including insurance premiums;  Payment of any retirement benefit; or  Payment of State or local tax assessed on the compensation of employees www.attorneylawny.com
  • 18. How Does A Sole Proprietor Determine his/her “Payroll?”
  • 19. How Does a Sole Proprietor Determine his/her Payroll?  The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self- employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period.
  • 20. How Do You Calculate and “Average Month” of Payroll?
  • 21. Paycheck Protection Program Calculating “Average Month”  The average monthly payroll costs must be determined from the 12-month period prior to the date the loan was made.  But, for those not in business as of February 15, 2019, they may use the average payroll costs from January 1, 2020 through February 29, 2020. www.attorneylawny.com
  • 22. What Can Loan Funds Be Used On?
  • 23. Uses of Loan Funds  Expenses the business incurred from February 15, 2020 through June 30, 2020 on:  Payroll Expenses,  Employee salaries, commissions, or similar compensations,  Continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;  Payments of interest on any mortgage obligation;  Rent (including rent under a lease agreement);  Utilities;  Interest on any other debt obligations that were incurred before the covered period. www.attorneylawny.com
  • 24. Forgiveness  What Can Be “Forgiven?”
  • 25. Forgiveness  During the 8-week period following the date of the loan, money used for the following may be forgiven, subject to the reductions:  a. Payroll costs as defined earlier at least 75% of total forgiveness  Up to 25% of total forgiveness:  b. Any payment of interest on any mortgage liability by the borrower incurred prior to February 15, 2020.  c. Rent obligated under a leasing agreement in force before February 15, 2020;  d. Payment for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020. www.attorneylawny.com
  • 26. Paycheck Protection Program Reductions Two type of reductions are explained in the CARES Act. #1: Total Forgiveness Average number of full-time Eligibility Amount X equiv. employees during the 8-week pd Avg. No. full-time equivalent employees from Jan. 1, 2020 – Feb. 29, 2020 or Avg. No. full-time equivalent employees from Feb. 15, 2019 – June 30, 2019). www.attorneylawny.com
  • 27. Paycheck Protection Program Reductions Two type of reductions are explained in the CARES Act. #2: Amount of loan forgiveness be reduced by the same amount as the total amount in reduction in total salary incurred by employees over the 8-week period after the loan date.  only applies as to employees who were making $100,000.00 or less in 2019, and  where such decrease is over 25% of the employee’s total annual salary, as based on the last full-quarter before the loan date. www.attorneylawny.com
  • 28. Paycheck Protection Program Rehiring  Can I Re-Hire to Avoid Reductions?  If you reduced number of employees or the salaries of employees during the time period of Feb. 15, 2020 - April 26, 2020, you shall not be subject to the reduction provisions if the number of employees and amount of salaries are returned to the levels on February 15, 2020, by June 30, 2020. www.attorneylawny.com
  • 29. Paycheck Protection Program Deferrals  The CARES Act allows a six-month deferral on portions not forgiven, before borrowers are required to begin making payments on any principal. www.attorneylawny.com
  • 30. Seeking Professional Guidance? Contact Donaldson Legal Counseling PLLC counsel@dlcesq.com www.attorneylawny.com