Topic: General Posts

Subject: Payroll Protection Program (PPP)
Eric Fishbein
Member: 2014
Posts:8
Submitted on 04-07-20 2:49 pm
Message:

Good morning,


 


Does anyone know when the clock starts ticking on using the PPP funds for payroll? Is is when funded? I'm in NY - is it when the Governor lifts the Executive Order so we can return to work?


 


Thank you.


 


Eric 


 


 

 
1  2  
Replies
Rohita Land
Member: 2020
Posts:

Subject: Re:Payroll Protection Program (PPP)

Submitted on 04-08-20 12:07 am.
Message:

Good Afternoon, As I understand it the clock starts upon disbursement.  


Also, in NY....hope you're staying safe. 


 

 
Gary Watkins
Member: 2018
Posts: 1

Subject: Re:Payroll Protection Program (PPP)

Submitted on 04-08-20 4:45 pm.
Message:

That is my understanding as well that the clock begins as soon as you receive funds.

 
Rollin Johnson
Member: 2010
Posts: 1

Subject: Re:Payroll Protection Program (PPP)

Submitted on 04-09-20 2:25 am.
Message:

Read guidance today indicating that funds should begin being used within 10 days of loan disbursement. Funds are meant to be used within 8 weeks but don't know that they'll be able to enforce these exact timelines. 


The bigger issue this week is how few of the loans will actually be funded. 

 
David Krassin
Member: 2018
Posts: 1

Subject: Re:Payroll Protection Program (PPP)

Submitted on 04-13-20 3:59 pm.
Message:

It when the loan is funded.  75% has to be used for payroll to be considered for loan waiver

 
Abiola Bankole-Hameed
Member: 2013
Posts: 3

Subject: Re:Payroll Protection Program (PPP)

Submitted on 04-13-20 8:46 pm.
Message:

I'm hoping someone can shed some light on independent contractors as it relates to the PPP.


The CARES Act clearly says to exclude them because they can file for the PPP by themselves. However, if I have an independent contractor working for my organization, do I stop paying them because they are entitled to the funds through the PPP. If I stop paying them, then they can choose not to do my work. What's the guidance on this? I'm trying to minimize disruptions to our business.

 
Baron LeGault
Member: 2013
Posts: 1

Subject: Re:Payroll Protection Program (PPP)

Submitted on 04-18-20 1:32 pm.
Message:

Keep in mind the purpose of the program is to enable employers to pay employees even if they aren't working, it has nothing to do with the back to work plans by each state.  For examply my church is applying for the loan and will use the funds to pay our day care staff and other full time employees that we ordinary wouldn't have the resources to pay since there is no day care revenue coming in.  Hence the title Payroll Protection.

 
Tom Auchter
Member: 2012
Posts: 2

Subject: Re:Payroll Protection Program (PPP)

Submitted on 04-20-20 1:53 pm.
Message:

Replying to Abiola:


You are correct that payments to your independent contractors are not covered.  If you don't pay them, they do not have to (and probably should not) perform work for you.  If you need them to work, then it's presumed that you are earning revenue from their work and you will have funds to pay them in that way.   If you don't need them to work, then as others have stated they are eligible to apply themselves.

 
Abiola Bankole-Hameed
Member: 2013
Posts: 3

Subject: Re:Payroll Protection Program (PPP)

Submitted on 04-24-20 6:12 pm.
Message:

Thanks for the clarification


 

 
Larry Chester
Member: 2006
Posts: 3

Subject: Re:Payroll Protection Program (PPP)

Submitted on 05-03-20 8:35 pm.
Message:

In spite of what has been written above, there are three allowable "payments" to people that are considered as acceptable and forgivable under the PPP.



  1. Employees paid and receiving W-2s

  2. Independent contractors who are paid and receive 1099's

  3. Self employed individuals who take a members draw in lieu of wages.


When I applied for the PPP, I considered all three of those, entered documentation for those three levels of payments, and received the entire amount that I had requested.  There are actuallly two important portions to the PPP.  The first is obviously getting the loan, and the second is getting it forgiven.  The latest guidance that I have seen shows that the clock starts ticking on the day of the disbursements.  You have 8 weeks to pay and collect documentation on your payments, using payroll forms from your payroll service, checks and other means to prove that you used the PPP money you received for Payroll.  


The issue here is that only 25% of the money that you received is eligible for forgiveness for payments other than compensation, and there are only a few categories that even apply.  


If the money isn't forgiven, then it's a loan accruing 1%  interest.  


You will receive forgiveness up to 100% based on having the same number of employees during the PPP 8 week period that you had on or about February 15th, and pay them the amount that they earned during that time.  If you pay them less, or have fewer employees, your forgiveness will be reduced comparably.  


Larry

 
Victoria Montes
Member: 2008
Posts: 1

Subject: Re:Payroll Protection Program (PPP)

Submitted on 05-15-20 8:04 am.
Message:

Helpful information in this post. Is the PPP still available? Is it available to yourself as a sole proprietor? What criteria do I need to meet? Thank you.

 
Raji Kalra
Member: 2018
Posts: 1

Subject: Re:Payroll Protection Program (PPP)

Submitted on 05-19-20 4:25 pm.
Message:

Funds are still available but you should apply by this week to ensure funds don't run out. You can apply through Kabbage or Lendio and yes you can apply as a sole proprietor. I would work with Kabbage and they will tell you what is required and work with you to calculate the loan amount you can receive/request. 

 
David Fowler
Member: 2004
Posts: 7

Subject: Re:Payroll Protection Program (PPP)

Submitted on 05-26-20 3:21 pm.
Message:

 


I have now attended several webinars given through auspices of professional organizations by CPA and law firms, discussed some of the rules with the CEO of my credit union (who has regular interaction with SBA personnel) and advisors who have filed for clients and have read information on the SBA.gov site, including their FAQ to which I would refer people. https://www.sba.gov/document/support--FAQ-lenders-borrowers 


 


The first two take-aways I have from preceding is that there are two distinct phases -  (1) the application process and (2) the use of funds and request for forgiveness - and that it is somewhat complex with SBA still issuing interpretations/guidelines!


 


Note the disconnect between the 2.5 months of various permissible "payroll costs" used to calculate the loan but (at least 75%) must be used to pay just 8 weeks of subsequent payroll (to receive forgiveness). Hence at first blush mathematically almost 25% (3 weeks over around 11 in base period) would seem ineligible for forgiveness which is why loan can be used to pay various categories of permissible non-payroll expenses e.g. utilities, interest, etc. and still receive forgiveness.


 


Even if all loan is not used on expenses that afford forgiveness, as one respondent commented, it can then be converted into a 1% loan - for almost two years.


 


There are also several different base "periods" for payroll that can be used depending on applicant's situation (e.g. see FAQ 14). However, one kicker is the $100,000 annualized cap on (certain categories i.e. "cash") compensation per individual but see also additional areas of payroll which are excluded from the 100k cap - FAQ #7 - and so includable in determining (an increased amount of payroll costs based) loan.


 


It seems the 8-weeks per webinars will be applied very strictly - to the day per one CPA firm's example calculations - and with payments possibly even needing to clear the bank within the 8 weeks to be forgivable?


 


What is complicated is calculation of reduced amount forgivable where an employer reduces either workforce or individual pay during the 8 weeks period, as in example one CPA firm presented


 


I believe there will be significant lay-offs after the 8 weeks if economy does not respond quickly; a neighbor was just laid off as part of a 20% reduction in force (they'd already released all contractors BTW) and was given a 2.5 months’ severance package payable on his regular pay periods over next 2.5 months. My reading is company's strategy is to obtain 100% forgiveness of PPP loan used to fund all that severance cost (for cashflow and forgiveness purposes it will use part of PPP to pay other eligible utility etc. costs during 8 weeks) then effect a permanent headcount/payroll reduction that is still within the 25% FTEE/pay limits for compliance.


 


To address some previous Q&A points:


 


Victoria - as of several days ago I knew of several smaller regional banks and credit unions that were still processing applications. I would suggest you approach those lenders and not the "big banks". Firstly, the SBA set aside some ($60 or $80 billion, I believe the latter) specifically for disbursement by smaller institutions. I have heard horror stories from lenders and advisors of smaller clients alleged poor treatment by JPMC, BofA, Wells. Chase sat on an application for almost a week that i submitted, told me they were processing it but there were 100,000 (!) applicants ahead of me, then suggested that I seek another lender , then rejected / sent back my application for lack of some undisclosed support even though I followed their own template and which identical support two other institutions agreed was more than sufficient and one of latter processed my application (approved and funded within a few days) 


 


Rollin - the 10 days "rule" relates to the period after SBA approval within which the lender must disburse funds to the approved applicant/borrower; I have not read any guideline stipulating when funds must be used by borrower other than within the 8 weeks 


 


Abiola/Larry - I found it interesting that Larry was able to include both independent contractor and self-employed member draws in his (approved and funded) application. My reading of SBA guidelines and webinar leaders comments thereon would suggest they are distinct separate categories and that whereas both 1099 contractors and self-employed can apply for PPP in their own right, these are totally independent of PP applications by the client company for whom they provide services - see specifically SBA FAQ #15 that states this


 

 
Larry Chester
Member: 2006
Posts: 3

Subject: Re:Payroll Protection Program (PPP)

Submitted on 05-26-20 3:59 pm.
Message:

David:


I certainly appreciate your comments.  There have obviously been changes in this program almost on a daily basis, and though the speed of the changes has reduced, it is still happening.  So my suggetion is that everyone stay in close touch with their bank, since it is the bank that is going to accept your application for forgiveness and forgive the loan.


But to your point, the guidance has changed from the time of the application to now.  The purpose of the PPP loan was go bring people back to employment.  Initally, the guidance was that the business owner could get money for Independent contratractors and themselves in addition to the W-2 employees.


Now, they're saying that IC's can apply on their own, which means that companies don't need to pay their IC's.  But they also will ask that you provide your schedule C from your 1040 from 2019 to document that you've made money and will use that to forgive you up to $100,000 in annualized wages as part of your PPP.


Remember that there are three significant parts of the PPP.


1. Getting your application accepted.


2. Getting your funding


3. Getting the loan forgiven


If you don't get it forgiven, then you need to pay it back.  So, for most businesses, that #3 is going to be the most important part of the whole thing!!!


Larry

 
Carl Lowman
Member: 1999
Posts: 1

Subject: Re:Payroll Protection Program (PPP)

Submitted on 05-29-20 8:23 pm.
Message:

The 8-week "covered period" starts on the date you signed the loan documents (i.e., loan origination date).

 
Larry Chester
Member: 2006
Posts: 3

Subject: Re:Payroll Protection Program (PPP)

Submitted on 05-30-20 2:12 am.
Message:

Carl:


I'm sorry, but you're wrong.  The 8 week period begins with the day of disbursement of funds, the day that the money lands in your bank account.  From then, you have 56 days, counting the day that the money landed in your account as day 1, to spend it.  Currently the House bill potentially extends the 8 weeks to 24 weeks, but that's not law yet.  


Larry

 
Irf Mattla
Member: 2018
Posts:

Subject: Re:Payroll Protection Program (PPP)

Submitted on 06-03-20 3:50 am.
Message:

Correct the covered period is from date of loan depoisted in your bank or you could also use alternative period calcuations which is from next weekly payroll date following the depoist.


Regards,

 
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