Surviving COVID-19 Paycheck Protection Program “Obtainable” Path to Loan Forgiveness Welcome! Today’s event will be starting shortly.
Your Hosts Jim Laube Anne Gannon, CPA Joe Erickson The Largo Group
Disclaimer The information provided on this webinar does not, and is not intended to, constitute legal or accounting advice; instead, all information, content, and materials available on this webinar are for general informational purposes only. Attendees of this webinar should contact their attorney or accountant to obtain advice with respect to any particular legal matter. No attendee or viewer of this webinar should act or refrain from acting on the basis of information on this webinar without first seeking legal or accounting advice from counsel in the relevant jurisdiction. Only your individual attorney or accountant can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. All liability with respect to actions taken or not taken based on the contents of this webinar are hereby expressly disclaimed. The content on this webinar is provided "as is;" no representations are made that the content is error-free. Consult with your lender and the Small Business Administration Paycheck Protection Program
Webinar Format • Interactive format • Access to participant comments & questions • This webinar is being recorded PLEASE PARTICIPATE! • Links to resources will be Collaboration is VERY powerful! included on the recorded webinar page Paycheck Protection Program
Show/Hide Control Panel Questions & Comments Questions Tab Type your Questions / Comments Paycheck Protection Program
PPP Flexibility Act of 2020 Key Changes • Extends the Safe Harbor date to December 31, 2020 • Lengthens the payback period from 2 to 5 years • Stretches the forgiveness period to 24 weeks • Allows option to stay with 8-week forgiveness period • Additional FTE exemptions based on business activity • Change in use of funds requirement to 60% payroll and 40% covered non- payroll expenses • Allows delayed payment of employer payroll taxes Paycheck Protection Program
Anne Gannon www.thelargogroup.com CPA, The Largo Group Paycheck Protection Program
PPP Bootcamp Anne E. Gannon, CPA Principal The Largo Group, Inc.
NEW RULES - AGAIN 60% Payroll 24 weeks – 4 more months to spend money NEW FORGIVENESS APPLICATION Ability to defer payroll taxes Safe harbor now 12.31.20 Extend deferral period for borrower payments to the date that SBA remits loan forgiveness to lender OR 10 months after the end of the covered period if borrower does not apply for forgiveness
What about FTE? Safe Harbor now 12/31/2020 with additional exceptions for: 1. Sales not returning to pre-covid levels 2. Lack of qualified candidates 3. Employees who left voluntarily 4. Employees who requested reduction in hours Additional information expected to be released any day, but with 12/31/2020 FTE focus has shifted significantly!
Making new rules work for your business…
Scenario: Received Funds: April 1, 2020 Total PPP Loan: $200,000 • Step 1: Calculate amount spent to date on all allowable expenses • Rent – 2 months of $8,000 = $16,000 • Utilities – 2 months of $2,000 = $4,000 • Payroll – 6 weeks of $12,000 = $72,000 • Step 2: Calculate 60% of Total Loan - $120,000 THIS IS Initial Loan MINIMUM to spend on payroll over 24 weeks $200,000 Payroll 4.2 – 6.10 $72,000 • Step 3: Calculate dollars remaining in loan: Utilities/Rent 4.2 – 6.10 $20,000 Amount remaining: $108,000
June 10 th is a brand new day in PPP Calculate plan moving forward: Additional payroll needed to fulfill 60% - • Payroll to date $72,000 – • Payroll required to meet 60% - $120,000 • Payroll Dollars remaining: $48,000 • HOW MUCH PAYROLL DO I NEED TO RUN MY BUSINESS BASED ON CURRENT OPERATIONS???
Building an efficient labor plan… Average weekly sales in May $15,000 Labor % pre-covid (excluding taxes 30% and insurance) New Weekly Labor $4,500 Remaining weeks of payroll 11 WEEKS at least – could be more ($48,000/4500) based on total dollars remaining
Building efficient budget with remaining PPP dollars: Amount remaining as of 6/10 $108,000 Rent/Utilities Monthly $10,000 Remaining months (4) $40,000
Revenue Trends 2018 - 2020 $100,000.00 $90,000.00 $80,000.00 $70,000.00 $60,000.00 $50,000.00 $40,000.00 $30,000.00 $20,000.00 $10,000.00 $- June July August September 2018 2019 2020 Planning for 70% revenue does not have to mean lost PROFIT
PRIME COST TRENDS 2018 2019 2020 0.7 0.68 0.68 0.66 0.65 0.64 0.63 0.62 0.62 0.62 0.62 0.62 JUNE JULY AUG UST SE P T E M BE R Managing Prime Cost Trends KEY to profitability COST OF GOODS + LABOR = 55%
Build Budget for next 4 months June July August September Revenue $60,000.00 $60,000.00 $60,000.00 $60,000.00 COGS $19,200.00 $19,200.00 $19,200.00 $19,200.00 Labor $18,000.00 $18,000.00 $18,000.00 $18,000.00 Operating Expenses Rent/Utilities $10,000.00 $10,000.00 $10,000.00 $10,000.00 Operating Other $10,000.00 $10,000.00 $10,000.00 $10,000.00 Net Income $2,800.00 $2,800.00 $2,800.00 $2,800.00 2019 monthly labor $30,000 but with sales down – revised monthly labor target is $18,000 THIS GIVES ME MORE WEEKS WITH PPP FUNDS
BUILD BUDGET WITH PPP Funds June July August September October Revenue $60,000.00 $60,000.00 $60,000.00 $60,000.00 COGS $19,200.00 $19,200.00 $19,200.00 $19,200.00 Labor $18,000.00 $18,000.00 $18,000.00 $18,000.00 PPP Adjustment -$18,000.00 -$18,000.00 -$18,000.00 -$18,000.00 Operating Expenses Rent/Utilities $10,000.00 $10,000.00 $10,000.00 $10,000.00 PPP Adjustment -$10,000.00 -$10,000.00 -$10,000.00 -$6,000.00 Operating Other $10,000.00 $10,000.00 $10,000.00 $10,000.00 Net Income $30,800.00 $30,800.00 $30,800.00 $26,800.00 Without improved Total PPP funds to use labor – PPP would $108,000 end in July/August Assume September PPP rent adjusted to $6,000
Total 2019 Revenue $240,000 $650,000 COGS $76,800 32.00% $227,500 35.00% Labor $72,000 30.00% $260,000 40.00% PPP Adjustment -$72,000 Operating Expenses Rent/Utilities $40,000 $40,000 PPP Adjustment -$36,000 Operating Other $40,000 $82,000 Net Income $119,200 49.67% $40,500 6.23% PPP Dollars $108,000 included in bottom line Regardless of sales – margins are key!
Net Income Trends $35,000.00 $30,000.00 $25,000.00 $20,000.00 $15,000.00 $10,000.00 $5,000.00 $- June July August September $(5,000.00) $(10,000.00) 2018 2019 2020 with 62% and PPP 2020 with old margins 2020 with SAME LABOR Managing margins with lower sales can have big impact on bottom line!
Detailed Plan for spending remaining PPP Dollars: PPP 4.2 – 6.10 6.10 – 9.30 Labor $72,000 $72,000 ($4,500/week) Utilities/Rent $20,000 $36,000 (3.5 months) Total $92,000 $108,000
Resources: Post Covid-19 Cash Flow Mastermind Session with David Scott Peters Thursday, June 18 th at 12pm Eastern www.thelargogroup.com/store
Thank You Anne E. Gannon, CPA One Boston Place, Suite 2600 Principal Boston, MA 02108 The Largo Group, Inc. agannon@thelargogroup.com www.thelargogroup.com 617-202-6674
PPP Loan Forgiveness Do these changes make it possible for you to get total loan forgiveness? Paycheck Protection Program
FTE Calculations Average FTE: This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period. For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower. Paycheck Protection Program
FTE Calculations
Forgiveness Application Resources Download FTE Calculator www.restaurantowner.com/ppp Paycheck Protection Program
PPP Resources Page ▪ Links to SBA resources ▪ Webinar recording ▪ FAQs ▪ Downloads ▪ Financial assistance info www.restaurantowner.com/ppp
Forgiveness Application Resources Download Recall Letter Template www.restaurantowner.com/ppp Paycheck Protection Program
Forgiveness Application Resources Download Document List www.restaurantowner.com/ppp Paycheck Protection Program
Forgiveness Application Resources www.restaurantowner.com/snip/441.htm
FTE Restoration What percentage of FTEs you had before Covid-19 do you think will be restored by December 31st? Paycheck Protection Program
Q&A Questions Additional questions to info@restaurantowner.com
Special COVID19 Resources Page ▪ Survey results ▪ Webinar recordings & notices ▪ Industry resources ▪ Financial assistance info ▪ Updated daily www.restaurantowner.com/covid19 www.restaurantowner.com/virus
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Surviving COVID-19 Paycheck Protection Program “Obtainable” Path to Loan Forgiveness Thank you for attending! info@RestaurantOwner.com
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