TRACKING YOUR PPP LOAN FORGIVENESS New SBA Guidance and Reporting - PowerPoint PPT Presentation

TRACKING YOUR PPP LOAN FORGIVENESS New SBA Guidance and Reporting

MATT VENUTO RICHARD KING Directing our team of developers, Over the last decade through Richard is always improving insurance and payroll, Matt has ConnectPay’s proprietary payroll worked with thousands of platform to ensure accurate payroll businesses. and tax compliance when laws change and new programs are introduced. DREW SCHILDWACHTER Drew has worn many hats over the years as a contractor, video retail multi-unit franchisee partner and operations director – commercial sign company owner and most currently, operations leader at ConnectPay.

Agenda Overview 01 Main Topics 02 Simplified 8-week period Incurred or Paid FTE Calculation Defined Magic June 30 Date Confirmed New Forgiveness Calculation and Worksheet FTE Reduction Safe Harbor Owner Compensation Increases Prohibited Documents Required for Recordkeeping Reports Q&A 03

Help Us Help You Better If you do ask a question – if you could please provide this info: ● What is the industry that your business in? How many employees do you have? ● ● How often do you pay them? What has been the revenue impact on your business? ● ● When did you received your PPP Loan? ( Example: Service station, 5 employees, bi-weekly, significant - revenue down 30%, funded May 1st) This will help us more accurately answer your question, and conserve time.

Tool that we will provide you PPP Covered Period Worksheet DOWNLOAD NOW

The new guidance allows borrowers to use an 8-week PPP Covered Period Worksheet covered period beginning with the loan disbursement date OR an “Alternative Payroll Covered Period” that aligns with the borrower’s regular pay cycles. SIMPLIFIED 1. Start by marking the date that your PPP loan was 8-WEEK funded. That is the beginning of your 56 day PERIOD Covered Period for all non-payroll expenses. 2. If that fund date is in the middle of a payroll cycle borrowers with weekly or bi-weekly payroll may elect to calculate the 8 week period at the beginning of the first day of their next payroll cycle. Semi-Monthly and Monthly cycles are excluded.

Borrowers can include eligible payroll and non-payroll costs paid OR incurred during the 8-week period of their choosing. This should remove the need to INCURRED accelerate pay dates or alter your regular pay schedule. OR PAID Count payroll cost that were both paid and incurred only once ● Count non payroll cost that were paid and incurred only once ● Eligible non payroll costs cannot exceed 25 % of total forgiveness ● amount

Full Time Method: The SBA has defined full-time equivalents as employees working at Average number of least 40 hours. hours paid per week for each employee Less than Full Time Method: / FTE 1. To make it even easier the SBA created a simplified method to 40 DEFINED calculate FTEs: each employee working at least 40 hours a week equals 1 FTE; each employee working under 40 hours a week equals 0.5 FTE. FTEs CALCULATION 2. Alternatively, borrowers can enter the average number of hours paid per week for each employee during the Covered Period or the Alternative Payroll Covered Period, divide by 40, and round the total to the nearest tenth with the maximum capped at 1.0.

MAGIC Regardless of the 8-week period chosen, reduced FTEs and pay rate reductions in excess of 25% (for JUNE 30 EXCESS employees earning less than $100k annually) must be 25% DATE restored by June 30th to maximize forgiveness CONFIRMED

Potential forgiveness amounts NEW Modified Total: Payroll costs + non-payroll costs - total ● FORGIVENESS hourly/salary wage reductions * FTE reduction quotient PPP loan amount ● CALCULATION 75% of your payroll costs ●

FTE Employees who are fired for cause, voluntarily resign, or request reduced hours during the 8-week Covered Period or Alternative REDUCTION Payroll Covered Period will still count as an FTE. SAFE HARBOR It is very important to document each incident. This includes offers to return to work by employees collecting unemployment.

OWNER Owner compensation cannot exceed $15,385 or the 8-week equivalent of their applicable 2019 compensation during the 8-week covered period, COMPENSATION whichever is lower. INCREASES PROHIBITED However, employees can have $15,385 of compensation and additionally the employers’ share of Group Health plan and retirement match can be included.

You can find the detailed list of documents in the forgiveness application but you can expect to prepare: ● PPP Loan Forgiveness Calculation Form PPP Schedule A ● ● Payroll documentation: OVERVIEW Bank Statements ○ DOCUMENTS ○ Tax forms Receipts or account statements documenting employer ○ REQUIRED FOR contributions to health insurance and retirement plans FTE documentation ● FORGIVENESS ○ Payroll tax filings APPLICATION Employee wage reportings or unemployment insurance tax ○ filings Nonpayroll documentation ● ○ Documentation verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period

Certifications on Behalf of the Borrower ● This is on Page 4 of the application. Please read this page carefully. ● Optional Demographic information (Page 11) Payroll reports ● - Payroll Summary DOCUMENTS - Payroll Journals REQUIRED FOR ● Group Health Plan and Retirement contributions by employers SUBMISSION: Bank Statements ● Payroll tax filings - Form 941(s) ● FORM 3508 Unemployment tax filings ● ● Backup documentation for FTE calculations Receipts, cancelled checks or statements - For lease and utility ● payments Loan and lease agreements or statements ●

Documents that should be maintained but not submitted: Calculation of wages and FTE for each employee including wage ● reduction calculations and limiting to $15,385. DOCUMENTS Documentation of qualified employee reductions (Refusal to ● REQUIRED TO BE return, voluntary resignations and voluntary reduction in hours). MAINTAINED BUT Safe Harbor FTE calculations ● NOT SUBMITTED Retain all files for 6 years after the date the loan is forgiven and/or paid in full. Provide access to files upon request.

Documents should be managed and maintained assuming an SBA ● audit. Most banks are telling us that they will utilize a digital application ● and won’t accept the paper application. Backup documents should be kept for all calculations made as a ● part of the forgiveness application process. Internal controls should be maintained and memo of assumptions ● RECORDKEEPING and interpretations. These should be dated. Retain all files for 6 years after the date the loan is forgiven and/or paid in full. Provide access to files upon request.

What to get started on now to make the process manageable, and make sure good records are kept. The forgiveness loan submission will likely be digital. So, supporting documents will need to be in PDF or Word format to upload during the GETTING STARTED loan application stage. It is best to begin to WITH organize those documents as we wait for RECORDKEEPING further guidance and updates. DOWNLOAD NOW

Forgiveness Calculator provided by CBIZ DOWNLOAD NOW

Reports ConnectPay will provide our clients with a data feed report, which includes the detailed numbers for the Payroll Costs, FTE Calculations and the Salary/Hourly Wage Reduction Calculation needed for Schedule A. Paycheck Protection Program Payroll Cost Report

Paycheck Protection Program Payroll Cost Report Paycheck Protection Program Payroll Cost Report Report period: month dd, yyyy - month dd, yyyy Employer Employer Employer Employee State & Local Health Retirement Employee Month/Year Earnings + Taxes + Deduction + Contribution - Federal Taxes = Payroll Cost Totals 0

ConnectPay HR Resource Center Every ConnectPay customer receives 6 months of free access to our HR Portal. Contact us for a free demo to see how this program can help you run your business. LEARN MORE: ConnectPayUSA.com/hr

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Forgiveness Calculator PPP Covered provided by CBIZ Period Worksheet DOWNLOAD NOW DOWNLOAD NOW

QUESTIONS & ANSWERS

MATT VENUTO RICHARD KING mvenuto@ConnectPayUSA.com rking@ConnectPayUSA.com (781) 941.6107 (774) 300.8926 DREW SCHILDWACHTER drew@ConnectPayUSA.com (617) 360.1352

THANK YOU!

References SBA PPP Loan Forgiveness Application Information 01 https://home.treasury.gov/news/press-releases/sm1010 PPP Loan Forgiveness Application 02 https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgive ness-Application.pdf ConnectPay Webinar Resources 03 https://connectpayusa.com/navigating-small-business-payroll-during-covid-19-webinar-res ources/?et_fb=1&PageSpeed=off