Help Me With Sign Arizona Banking Presentation

Help me with industry sign banking arizona presentation free

this is a march 3rd the special session we have today on ppp updates um i'm robert theobald small business ombudsman and vice president of small business services here at the arizona commerce authority i'd like to first start by thanking all of our community partners we cannot do these boot camps without them they are invaluable and uh we appreciate their time effort and expertise and all the sessions they've done so for those that haven't joined us before the small business boot camp is designed to help small businesses uh with less than 20 employees work through the coming crisis and return stronger than ever however any size business is more than welcome to be on these boot camps and the content is helpful for for most businesses out there it is a statewide initiative supported by our community partners that i listed before and it is not only just a boot camp but we have a resource collective website as well which i will get into here shortly so a small business bootcamp and resource collective website is a great website to favorite save on your desktop or wherever on that you can find the links to register for upcoming sessions you probably went to that website to register for today's session you can also find the resource collective and then you can find all of our previous sessions all of our previous sessions have been recorded and are posted on the archive at the bottom of that page by week and you can go back through those uh listen to any of the topics that you may be interested in or want to go back and re-watch because you watched it previously we also include uh copies of the slide decks that were used or other materials that were shared during those sessions so that archive is an amazing resource we have over 125 sessions listed on there and you know again they're available for you to go back any time and watch as i mentioned we have the resource collective and the resource collective is the page set up with the tools guides and resources provided by our community partners [Music] you can go on to this site and download the information uh review it see what's available for your industry and your business this is just a sample of some of those resources that are available as you can see on this list there's unemployment insurance guides there's guidance for retail guidance for barber shops and cosmetologists construction manufacturing the say six workplace readiness essentials uh et cetera so there's a lot of great information available for you on that site i'd like to transition real quick into some updates for small businesses first we're going to put these links in the chat so you can access them that way but the shuttered venue operators grant fhq has been updated so we want to share that with you the application process is still not up yet but some information has been added to the faq um so if you're a event venue that was shuttered during during covid this is some great information for you additionally we're on to share the ppp lender list provided by the arizona sbdc or sba district office they've gone through and updated this to have all the different lenders in the state that are doing ppp loans additionally uh this is a great link i refer to it multiple times a day i usually keep it open in a tab is the sba covered 19 relief options this is the website that includes links to the ppp eidl the shuttered venue operator grant debt relief and other programs so it's a great uh website to be familiar with and then i wanted to mention uh we just finalized uh putting together a special session of the boot camp next wednesday on the employee retention credit um we're going to focus that session solely on the employer retention credit this is a program uh that is part of the cares act and also part of the stimulus package that a lot of businesses don't know about and businesses can get up to thousand dollars per employee in this credit so there's a lot of a lot of funds to be had for small businesses that are going to go through the work and so we want to have a special session to talk just about that because uh if your business uh needs some additional funds this is maybe an option to get some of that back and uh so we want to walk our way through that program so again that's on tuesday march 10th at 9 00 am the registration link should be up uh today or tomorrow in the boot camp website additionally we have our arizona business resources for coven19 at azcommerce.com forward slash cover dash 19. this is our main website for all things business related decoding 19 not just small but also large business there's business guidance financial resources and other items that can help you as you uh during this time we also quickly want to share some of the aca programs that you can leverage to your benefit first there's small business services and we can help support uh your business working through the sba working with the sbdc's the small business development centers working with score and other no-cost uh business programs that are out there we can help you navigate local banking contacts and other programs additionally our workforce division has programs to help if you're looking to hire employees bring new staffing on board or upscale your existing employee base and our arizona manufacturing extension partnership can work with all the manufacturers throughout arizona to help grow and develop their businesses through many different programs that they have during this time there's a lot of people looking to open up a side gig started their own business uh or expand their business into new categories and the small business checklist is a great resource for those individuals it is an online interactive checklist that helps identify the licensing registration compliance needs of the business in the local state and federal levels now you can find that azcommerce.com forward slash small biz and then finally we want to just mention the state's coven 19 information and resource page arizona together.org this website has all kinds of information related to covet and it is there to help support everyone throughout the state so with that a quick look at this week's sessions yesterday we had a great session on assembly and productive dream teams if you're looking at ways to provide a better environment for your team or motivate your team there's great information on that and you can go back and watch that recording today we have our update on the paycheck protection program um last week the white house came down with some updates on it we wanted to share those with you and with the information we had so we've got this session today and then tomorrow we have implementing project plans to streamline success and we are looking forward to that one as well so with that i want to go ahead and introduce today's speakers we have amber cordova the managing manager of consulting services and business education at prestamo cdfi uh amber has been with us multiple occasions to talk about ppp she is one of the experts in the state uh whenever i have questions i always give her a call she does a great job and we're looking forward to a presentation today and then we have brian quijada who is the outreach and marketing specialist with the arizona district office of the sba uh so we're excited to have an sba representative with us today as well and he'll be available when we get to our question and answer session later on in the presentation so with that i'm gonna go ahead and turn the time over to amber bryant and let you get started wonderful thank you so much good morning everybody thank you for having me very excited to be here to talk about the updates to the paycheck protection program today when we go through i'm going to go ahead and share my screen let's see slideshow [Music] okay so um i'm not gonna go through typically i go through each uh you know each kind of tax form and give you very specifics on how to apply for the program today we're going to focus a little bit more on just these new updates and the changes to the program but in the chat i'm going to go ahead and put the um i don't think i can see it while i'm sharing my screen but i will put a link to one of the former webinars through the bootcamp that we've done and it walks you through step by step what you need to do to actually get prepared to apply how to look at your tax documentation so that's really useful if you are looking to apply and you're not looking for updates so that's one thing that you can you can do okay so just a quick recap of what the paycheck protection program is that a ppp program is a loan it's an actual loan you will have a no you will have loan documentation that you have to sign however it is 100 forgivable if you use it correctly and you apply for forgiveness so just want to make sure that everybody knows that it is a loan so your lender will provide you with a note that you have to sign it's intended to help employers keep employees on staff and to help self-employed individuals with owner compensation replacement and we talk about self-employed we're talking about sole proprietors that can be anything anybody who owns their business and operates as a sole proprietor it can be a single member llc that files schedule c on their taxes and it can also be a partnership with k1 income again and we'll talk a little bit more about forgiveness later on in the presentation but this loan is 100 forgivable if you're meeting the conditions i will say that 100 as a lender 100 of the applications we've submitted with full approval for forgiveness have been fully forgiven by the sba so the program is working as it's intended to and they've also eased up a lot of the restrictions on applying for forgiveness so we'll walk through some of the forms and some of the changes to the forgiveness aspect later on in the presentation as well if for some reason a portion of your ppp is not forgiven or you forget to apply it is a fixed five-year term with a one percent interest rate um ppp is not considered taxable income so you do not have to pay taxes on it and the expenses that you use for the proceeds of your ppp are something that you can write off on your taxes prior to the legislation that came out in december right before the end of the year you weren't able to use the expenses and there was a lot of not mystery but there wasn't a lot of clarity around how to handle everything for tax purposes so that has been clarified and it's very favorable for small businesses um so most accountants know that at that at this point but if your accountant is telling you that you shouldn't take a ppp because it's going to impact your taxes you might want to revisit that conversation with them and then in the past if you received one of those idle the economic impact disaster loans or economic injury disaster loans and you received that advance prior to this new legislation that was something that was reduced for mere forgiveness but that is no longer happening so even if you got an idol grant as a part of an idol loan then that's no longer withdrawn or taken out of your forgiveness so it is 100 forgivable for those of you that received a first draw ppp over the summer you are eligible to get a second draw ppp if you meet certain conditions and that's going to require you to have seen a 25 reduction in one quarter of 2020 compared to the same quarter of 2019 so there that is a new requirement with this second draw ppp loan you do not have to have already received forgiveness or have even applied for your forgiveness for your first draw before you apply for a second draw so that's that's an important thing to note in terms of the ppp if you did not get a ppp during the first round over the summer you can apply for the first draw now at this moment there's not enough time left in the program for somebody to apply for their first draw ppp get it use the covered period and then apply for a second draw so if they extend the program that might be something that's a possibility however at this point if you are just now applying for your first draw there won't be enough time in the program for you to also apply for the second draw unless it's extended and you can apply now as robert mentioned there is a lender list that you can go on to the sba.gov for lenders that are providing ppp loans in the state of arizona i work for pristamos we are a cdfi we are accepting applications you can apply online so i encourage you to do that because i think we're great so some ppp rules and requirements so that everybody understands in terms of eligibility the program is open to for-profit businesses 501c3 nonprofits and 501c6 non-profit organizations which are typically membership leagues things like that if you're using the ppp for employees the principal residence for the employees must be in the united states for a first draw you must have 500 or less employees and for a second draw it's 300 or less and you must either pay w-2 wages where you withhold taxes from your employees paychecks and you give them a w-2 at the end of the year or you have to have self-employment income eligible uses of the funds is going to need to be 60 of your loan is going to need to go for w2 payroll and that's going to be either wages owner compensation replacement group health and retirement benefits and state unemployment taxes so at least 60 percent needs to be used for those items in order to get that full forgiveness the other 40 needs to be used for eligible expenses and that's going to be rent and lease utilities and when we talk about utilities we're talking about phone internet water electricity gas the interest portion of any fixed loans that you have for the business any ppe any cloud computing we'll talk about some more eligible expenses a little bit later on but you don't want those to exceed 40 of the loan in order to be able to get that full 100 forgiveness and then the terms of the ppp it's two and a half times the average monthly payroll on up to the first 100 000 in wages per employee and that also extends to self-employment income so as a self-employed individual you can only use up to one hundred thousand dollars in self-employment income anything over that has to be removed from the calculation now in the in the new updates there was a provision for second draw borrowers only that are in food service and accommodations they can have a three and a half time as opposed to a two and a half time your standard industry code has to start with 7-2 and again that's going to be food service or accommodations and the term of the ppp it's an 8 to 24 week covered period so you use the funds over an eight to 24 week period it's a minimum of eight weeks that's why at this point you can apply for a first and a second draw when there's only four or four and a half five weeks left of the program because right now it ends march 31st so the recent ppp updates the biden administration announced some changes to the program about a week and a half ago now this is um we haven't received the interim final guidance yet so basically uh the biden administration said they want to make some changes and then the sba actually has to write the guidance and write the rules and provide that to us before we can make any changes from a lender perspective and this is going to be all lenders across the board so right now the one thing that has changed is that only businesses with 19 or less employees are eligible to get their ppps processed right now anybody with 20 or more employees are currently on hold through march 9th so starting march 10th next week we will be able to resume filing those 20 and above and when we talk about what constitute employee it's not the fte or the full-time equivalency it's any part-time or full-time employee that you have is considered one employee whether they work one hour or 40 hours a week so it's it's 19 or less you can go through right now and the purpose of that is to really support the smallest businesses that have had some traditional barriers to accessing this program but again starting on march 10th anybody with 20 or more employees will be eligible to file i recommend starting your application process with whatever lender you're going to use so that when the time comes they can just submit the application through to the va and you're not starting from scratch with providing your documentation and figuring out eligibility another really neat feature is new schedule c calculations and this is something that we're waiting on we are waiting on the official guidance but what we have been hearing and what has kind of been shared is that we're going to start using line 7 of the schedule c which is gross income as opposed to line 31 net income so your gross income is the total amount that you've made for the year minus your cost of goods sold as opposed to the net income which is the total amount you made for the year minus your cost of goods sold minus all of your expenses the majority of small businesses work to try to reduce your net income as much as possible because that's where your self-employment tax liability lays so some people may have negative net income some people have really small amounts of net income and it really impacts the amount that those individuals are eligible for on the ppp we've seen people that are eligible for nothing we've seen people that have thirty one dollars seventy eight dollars um so what will happen is this will increase the ability to receive up to twenty thousand eight thirty three and remember that this max of twenty thousand eight thirty three is across all businesses so if you are self-employed and you have multiple llc's multiple businesses through the paycheck protection program you're only eligible to receive a max of twenty thousand eight thirty three home so it's important to make sure that you're not exceeding your eligibility there as of right now if you've already been funded and your lender has provided a form 1502 to the sba this is something that happens behind the scenes and you're likely not going to know about this this is not going to be retroactive so if you got funded you know right in the beginning of the program in january or early february there's a chance that you may not be able to retroactively have the change and get the get the maximum that's something you need to work with your lender on if you have used pristamos as your lender will automatically be recalculating anybody that's eligible um if you're in the process of filing your ppp and you believe that you're eligible for more based on line 7 as opposed to line 31 i'd get in touch with your lender and make sure that they know that you would like to you know change the process because there's some very specific back-end things that have to happen through your lender on behalf of all lenders and the sba i would like to ask for patience as we work through this process remember that we have not yet received the interim final guidance from the sba so at this point no lender should be able to fund using these calculations but they can prepare your application have your application ready and then there's going to be some new forms that are going to come out that will have to be signed that will replace the existing forms so that's something that we're waiting on right now it's really important just to maintain patience and understand that your lender is going to have to work through a lot of back end changes to withdraw and get new sba approval numbers and make changes in systems um so again try to be patient know that if you're eligible for more funding that you'll be able to get access to it and then another thing that the biden administration really put some emphasis on is is clarification around the itin um for non-citizen but lawful u.s residents this is something that has always been a part of the program we've always been able to use itins and lawful u.s right decisions have always been able to apply but there was not a lot of clarity around it we are looking for some more specifics there's a lot of gray area and a lot of nuances around this um so we're looking we're you know we're excited to get some more clarification in this particular area but what the biden administration has made clear is that non-citizen lawful u.s residents are eligible and that you can use an itin if you don't have a social security number there will also be an elimination of non-fraud felony convictions as an exclusion from the ppp program so right now if anybody with 20 or more ownership in a business has a felony conviction i believe it's within the last five or seven years it would exclude him from the program so they are changing that so that if it's a non-fraud so if for some reason you or one of your um the other business owners happen to have a fraud felony conviction then they'll still be excluded from the program another thing about student loans we will have more information about this but if you are delinquent or in a negative status on your student loans that should not be an exclusion from the ppp program but again we have to wait for that final guidance i know we have a lot of people that are hung up with the sba right now with hold codes as a result of having student loan delinquency so i'm excited for the guidance on this so hopefully we can process those through um from what we're hearing we should expect the interim final guidance on or around march 6th that's not a steadfast number but our date but that is you know kind of what we're hearing on when we should be getting this new interim final guidance and we will get a new 2483 that's the application that you actually sign before your file is sent for final approval to the sba so there'll be some new forms without these new forms you can't use the new calculation of line 7 on the schedule c so at this point because these forms and the guidance don't exist no lender should be able to put anybody through using line 7 as opposed to line 31 so we're keeping our fingers crossed that that guidance comes soon so that we can start processing the applications at the higher eligibility rate so if you're still looking to figure out how to determine your ppp amount it's going to be based off of two things one is going to be do you pay w2 employees and again those are actual employees that you withhold taxes from their paychecks you file quarterly reports with the irs in the state we're not talking about 1099 contractors 1099 contractors are eligible as self-employed individuals to apply for their own ppp loan so you're not able to use anything you pay to a 1099 contractor as part of your eligibility so what you're going to do if you have w2 employees and you can use either 2019 or 2020 data you'll take the total wages you paid for the year plus any company paid health and retirement and state unemployment and it's going to give you your total eligible wages remember that it's capped at 100 000 per employee the 100 000 does not include the health or retirement or state unemployment it's just the actual wages paid to the employee so you add all that up you divide it by 12 and that's going to give you your monthly average payroll cost for the year and then you'll multiply that by two and a half and that's going to give you your w2 wage ppp eligibility if you are self-employed and you file a schedule c on your personal taxes again you can use 2019 or you can use 2020. in the past we've looked at line 31 the net income but what we're expecting with the new interim financial guidance coming out hopefully in the next couple days is that we're going to be able to use line seven so you would look at line seven again you would divide it by twelve to get your average monthly owner compensation replacement and then multiply that by 2.5 that will be capped at twenty thousand eight thirty three because everybody's capped at that one hundred thousand dollars per person in wages if you are a partnership and you file a 1065 tax return you should be receiving a k-1 as part of your taxes and you're going to look at line 14 a 14 a for each partner will give you the self-employment income for the partner and as far as we know there's no changes to these calculations it's only the schedule c's that are changes so you're going to look at your k1 you're going to look at line 14a and you're going to add it together for all partners then you'll multiply that by 0.9235 to adjust for the self-employment taxes and that's going to give you the total self-employment income for the entire year each partner will not apply on their own the partnership applies as the business and includes all of the wages not wages but the the self-employment income for 14 a divide by 12 multiplied by 2.5 if you have a schedule c or you have a 1065 partnership you're eligible for self-employment income and if you also have w-2 employees you're eligible for the employees as well so you would add all of that together as part of that calculation and then if you are a second-draw borrower and you're in food service or accommodations and your standard industry code starts with the seven two and you can find that on your taxes typically you are eligible for three and a half as opposed to two and a half times all right the other types of documentation that you're going to need to make sure that you provide your lender are going to be articles of organization or incorporation for whatever state that you're organized in here in arizona you can go onto the arizona corporation commission website and actually do a search and pull down those articles if you don't have your original copy you'll also have to provide personal information and business information such as your tax id number so your social security number or your itin as well as your employer identification number also it's really important that when you are filling out your ppp application that you provide as much of your demographic information as possible so the reason for that is because the emphasis of this ppp program is to really reach underserved and minority businesses and the sba really needs to be able to track that so they know that they're accomplishing their mission and that they're able to track who they're actually helping so the types of questions you'll see is around race ethnicity and gender at birth so please fill that out if you can so that the sba can really make sure that they are serving through the intent of the program that's a real big mission of the biden administration as well and this owner information is going to be required for any owner that's 20 or more for the business will also require a photo identification and you'll also need to provide proof that you were in operation on or around february 15 2020. one of the requirements of the program in order to be eligible for ppp is that you were in operation on february 15 2020. the ways that you can prove that are through providing a business bank statement you can provide an invoice that shows that you had income coming in you can provide a general ledger from your accounting system if you use quickbooks something along those lines cancel check you just have to prove that you had some kind of income and expenses going through on or around february 15th just to show that you were in operation and then you will be you will need to provide your tax returns so that we can determine eligibility so again we're going to be looking for the schedule c if you are a schedule c filer so that would be sole proprietor or single member llcs partnership tax return is the 1065 with the k once and then 1120 or 1120s corporation return corporations and non-profits are not eligible for self-employment income so that will require w-2 wages so you'll need to provide tax documentation such as the 940 futa or the 941 quarterly report so you will have to provide wage documentation in order to get access to the second draw you must have been eligible for and received a first draw which i know is common sense but it's one of the questions that comes up a lot a reminder that you had to have been in operation on february 15 2020 there's a question about do you were you required to have an ein were you required to have filed for an llc and the answer is to that is no you just had to have been in operation so sometimes people start their business as a sole proprietorship you're just running your business as you're ramping things up and you file for those other things later that's fine you just have to prove that you were in operation and actually operating your business on february 15 2020. for a second draw you can have no more than 300 employees and remember we're talking about part-time and full-time it's not the full-time equivalency for the first draw it's a maximum of 500. now for the second draw you have to have seen a 25 reduction in gross receipts in one quarter 2020 compared to the same quarter of 2019 for most businesses they saw a reduction you know typically in quarter two and we're talking about calendar quarters so january february march is quarter one um april may june is quarter two and so on if you did not start your business until the end of 2019 you can use quarter one 2020 as your baseline and compare quarter two three or four of 2020 against quarter one and um that that will give you and it needs to be 25 or more it can't be less than 25 percent it can't be close to 25 it needs to be 25 or more it's a hard and fast rule and then in terms of your lender you can use any lender that's an eligible ppp lender you don't have to use the same lender that you use for your first draw you can look at the lender list that is on the sba website for lenders that are providing first draw on second draws um you know it's important to find a lender that you're comfortable working with there's a lot of lenders that did first draw ppps that just aren't doing second draws there's some lenders that are doing second draws but they're not doing first draws to new customers so you really have to make sure that you find the right fit for you actual uses of the ppp and i want to make a really important point the eligibility for determining how much you can receive in ppp is different than what you can use the funds for and this is one of the big misconceptions that i've run into your ppp eligibility the amount you're eligible for is only based on self-employment income or w-2 wages plus the employer paid for health and retirement and state unemployment a lot of people ask well here's my rent here's my utilities those items are not used as part of determining eligibility but they are eligible uses of the funds so you can use the ppp funds that you get to pay for operations expenditures which are going to include your business rent and lease utilities mortgage or fixed loan interest only and that's just the interest portion not the payment and remember that you had to have the utilities or the lease in effect on february 15 2020. you can also use the funds for operations expenditures like software that your business is required to use in order to meet the you know the virtual demands cloud computing human resources and accounting needs so those are all things that you can use the funds for also if your business had property damage out of um a result of the civil unrest that happened in the summer of 2020 and it wasn't covered by insurance or other means then you can do property damage repairs with the proceeds of the ppp and then finally worker protection and we're talking about ppe so if you need to provide protective equipment if you need to buy sneeze guards if you need to do something like do some extensions or add a drive-through window in order to meet the social distancing or safety requirements those are all eligible uses of the funds but remember that non-payroll eligibility use of funds can't exceed 40 percent in order to get that full forgiveness you need to use 60 or more and you can use up to 100 for payroll but 60 or more needs to go to payroll expenses and we're talking about wages tips commissions vacation time sick time and then the company paid for a portion of health and retirement benefits and then your state unemployment tax so again remember the 60 40 split at least 60 percent needs to be used for payroll expenses the other 40 up to 40 can be used for these other eligible expenses that we've talked about today when it's time for you to actually apply for forgiveness you will work with your lender and each lender is going to have different requirements on how they want to do things i think probably the majority of lenders are doing things electronically where ou'll provide all the documentation and fill out an electronic document make sure that you are working with your lender to find out what their specific requirements are you want to make sure that you apply for forgiveness within 10 months of the end of the covered period for full forgiveness so the covered period starts the day that the funds are deposited into your bank account and it's an 8 to 24 week period when this program first started it was eight weeks and then there was the paycheck flexibility program that made it eight or 24 weeks and then this new iteration of the program it's eight to 24 weeks you get to choose your covered period so remember you just want to make sure you apply within 10 months of the end of your covered period that you choose the covered period so technically you could do 24 weeks which is six months and then add another 10 months on top so there's a lot of time to apply for forgiveness definitely would recommend not waiting until you know the last minutes because you want to make sure that everything can get processed in time and there's no hiccups if you forget or for some reason do not apply for forgiveness within the 10 months you can still get forgiveness it'll just be at a reduced amount amount so once the end of your covered period hits and then it's been 10 months you'll go into repayment with your lender where you'll start having to pay back the loan you might have to make a payment and then apply for forgiveness and then you can get the the rest for given so just be cognizant about those dates it's a little bit different for everybody because it's all based on when the funds were deposited into your bank account there's good there's new forgiveness applications if your loan your ppp loan was 150 000 or less it's a very simple one page and i believe i have yeah so it's a really simple one-page document you don't have to provide any of the justification like you did in in the past there's fewer calculations you just need to make sure that you have all the records and that you keep them on file for four years for employment records and three years for all other records you want to make sure you keep them because the sba can audit you at any time so make sure that you keep you keep them handy or that you have access to them for loans over a hundred and fifty thousand dollars you will apply with the 3508 or the 3508 easy and this is what the um 3508 looks like it's actually i think it's 13 pages so it's much more complicated the 3508 easy is a much simpler form but the 3508 is going to require you to provide several different pieces of documentation it's going to be the ppa ppp loan forgiveness calculation form that i have shown here the schedule a the schedule a worksheet and the demographic information form so you need to make sure that you have all these items prepared and it's going to ask you to actually demonstrate how many employees you had during the look back period and then how many employees that you have had over the course of your covered period so the it's a little bit complicated i recommend that you actually take a look at the forms in advance you can just google sba form 3508 3508 easy or the 3508 s based on what your requirement is going to be and again anything under 150 000 is going to be that 3508 s which is just that one page document if you have 150 000 or more you're either going to do the 3508 or the 3508 easy and the requirement to use the easy as opposed to the traditional 3508 is going to be based on whether or not you qualify for the safe harbor so the safe harbor requirement is that you did not reduce the annual salary or hourly wages of any employee more than 25 during the covered period and that's compared against the most recent full quarter before the covered period and you will also have to attest that you did not reduce the number of employees or the average paid hours between january 1st 2020 and the end of the covered period so this is the exception is that if you had a reduction that arose from your inability to rehire individuals so if you temporarily had to lay them off you tried to bring them back and they wouldn't come back for whatever reason or um you just couldn't refill those positions maybe because you know the the workforce you just couldn't get the skilled labor that you need or whatever the situation might be the other option is that you didn't reduce and that your business was unable to operate at the same business activity levels because of um government related guidelines so for example here in arizona if you were a gym your business was shut down for quite a while and so that impacted your ability to run operations so that you you would qualify under these safe harbors so if you qualify under the safe harbors you're eligible to use the 3508 easy as opposed to the 3508 and again these two forms are just for borrowers who had 150 000 or more i know this is a complicated topic so feel free to reach out with any specific questions that you have but most of this information is is right on the different forms and you can google them and get access to them and it's really helpful so quick quick recap when and how to apply you can apply now the program is open to first and second draw applicants through march 31st and that means that your application has to be complete with your lender you have to sign the 2483 application and it has to be submitted to the sba by march 31st so please do not wait until march 31st to apply it's likely going to be too late you want to make sure that you have all your documentation prepared and all of the information ready that to provide to your lender you can look online on the sba lender list for the state of arizona you can also apply through our organization at christmasloans.org forward slash ppp eligibility again is going to be based on employers that paid w-2 wages or self-employed individuals that have positive net income were anticipating on line seven of the schedule c and for 1065 partnerships with k1s with positive net income on line 14 a first draw requires 500 or less employees second draw is less than 300 employees and you have to have seen that 25 reduction in one quarter of 2020 compared to the same quarter of 2019 forgiveness the ppp is 100 forgivable if you use at least 60 for eligible payroll costs remember that you can use up to 100 for payroll the purpose of this program is the payroll protection um and to clarify self-employment income that you pay yourself in draws if you're self-employed counts as that payroll portion make sure that you are using no more than 40 for other eligible costs and we already talked about what those were but the rent utilities ppe cloud computing those types of things again self-employed can use schedule c 100 for owner compensation replacement draws you will want to make sure that you're using at least a 10 week covered period in order to receive full forgiveness if you are using 100 of of your ppp for owner compensation replacement and remember that the cap is one hundred thousand dollar cap per employee including self-employment income and so that means that the max that you can get as a self-employed individual is twenty thousand eight thirty three and then finally you need to make sure that if you have 150 000 or more for your ppp that you're maintaining your full-time equivalency head count or you meet one of the safe harbor requirements which are talked about in those 3508 forms there's a lot of additional resources available your lender should be able to walk you through the process and answer questions we also have something called the prestamous prime program that is sponsored in part by the sba where we provide no cost assistance and we can help walk you through your ppp application even if you're not using us as a lender we also do a ton of different types of webinars on our website including ppp updates we'll be doing one as soon as we have more information about the interim final guidance from the sba and then we are also in process of launching a sba sponsored women's business center should be sometime this month that we're offering our virtual programming but again these are all free no cost business assistance for eligible businesses in arizona and nevada we also do other types of lending if ppp isn't enough or isn't for you you can check out our website to learn more about that and then that is all i have for the presentation and i think we're going to go into the q a session now so thank you amber we have a number of good questions in the q a box so uh if you want to pull it up and just start working through them and brian you can help answer some of these uh potentially but some of these are different types of questions that we've heard in the past so it's good to see some different questions coming up so and we'll let you uh start great so the first question i have here is do we have to pay easy taxes on the amount forgiven the forgivable amount the ppp is non-taxable so you do not have to pay taxes on the ppp no um if i got an idle loan and no ppp can i apply and use ppp monies to pay the idle um brian this might be one that you want to pop in but from my understanding the well actually the answer to that question no ppp monies need to be used for eligible expenses so that's going to be payroll and it's going to be the other eligible expenses we talked about paying off your idle loan is not an eligible use i guess except for the interest only portion of the idle loan is that how you would uh explain it as well right so there is some gray area on this technically um you can utilize ppp funding to pay off some of your idle but there's this is where the borrower needs to work very closely with their lender number one the expenses used cannot overlap the ppp funding with idle number one and number two also what kind of cash flow impact that may have on the borrower so a ppp is gonna have a five year and if it was if it was received before june of last year a two-year term at one percent whereas your idol is going to have a 30-year term so your your payment on idle is going to be much lower than what it would be on a ppp now we're just talking in the event that that portion is unforgiven so the this is where i defer them back to their lender to ensure that they go through um the expenses that they were that you utilize for each loan to ensure there's no overlapping and sure what if they're going to be forgiven if not remaining as is would probably be more beneficial to them with the longer term yeah yeah remember that idle loan is a 30-year loan as opposed to the ppp which is either a two or five-year loan so it's it's a much quicker payback on the ppp versus the idle okay next question what amounts from a partnership return in form k1 can be used for the ppp application calculation are there certain line items on the k1 yes you're going to look at line 14 a of the k1 and you'll add all of the k1s together and it's just line 14a and that will give you the total amount for the year you want to multiply that then by 0.9235 to adjust for self-employment taxes and that will give you your total annual wages or self-employment income divide by 12 and you'll either multiply by 2.5 or 3.5 can you include manufacturing expenses i believe that's no unless i'm incorrect brian i believe that's that's a no as well yeah it's not listed on the eligible expenses does this mean that i must have been generating income by february 15 2020. it's been in existence since 2006 but i stopped paying myself a salary in 2017. the way that um in previous webinars the sba representative has explained it is if you had income or expenses and that your business was in operation that that's the qualifier that you had some kind of income some kind of expenses that you had you know some level of business operation if your business was dormant for a couple years and then you picked it back up again and you want to do a ppp now that probably doesn't make sense what if you laid off your employees until the last six months and haven't been paying myself on payroll have just been taking small draws for both i'm not 100 if this question is about the calculation or what to use the funds for but if you laid your employees off and you brought them back you might want to look at your 2019 payroll as opposed to your 2020 payroll and use whatever year was higher for your w-2 wages and you want to make sure that you're retaining the same number of employees in order to meet the requirements of the program so this program isn't meant for people to lay off all your employees then get the ppp based on those employees and then not bring them back or not pay employees if that makes sense how does unemployment compensation factor into ppp from what i understand while you're receiving ppp during your covered period you want to stop or pause any kind of pua or unemployment benefits that you have you should not be taking both pua and ppp at the same time if you're if you're self-employed now if you yourself are taking unemployment because you're not paying yourself but you're still paying your employees you can use the ppp to pay them but you should not be on pua or unemployment and also be taking owner compensation replacement self-employment income replacement through the ppp um here's a question about the 25 reduction in gross receipts i'm just trying to read through this one um so the the reduction in gross receipts this is a really great question that i can't answer because i'm not one of the ones that made the rules just so that everybody understands about the rules the the question is the entire intent of the ppp loan was to keep employees on payroll why is the reduction in gross receipts and not on net income this is part of the legislation this is the way that it was written this is the way that the sba has taken the law and implemented it so um that's why i can't answer that question for you because i didn't write the law but you want to look at you can look at quarter over quarter so you can look at one quarter of 2020 compared to the same quarter of 2019 or you can look at the total gross receipts for 2019 compared to 2020. so there's two options there that you can look at but you have to have seen that 25 reduction in gross receipts and remember not to include any ppp in your gross receipts because it's not considered income is there a requirement that your business be in operation for a certain time period before applying i purchased the company as of august 2020 can i still apply for a ppp for that business um there's some very specific rules about change in ownership if the business was in operation on february 15 2020 you purchased it in august 2020 there are some specific rules that i would encourage you to look up um but you should be eligible if the previous owner did not apply for the ppp if they did apply for the ppp during the first round but didn't the second round then you would be eligible to do the second round if you maintain the same employees um brian is there any other rules around that that you think are pertinent to kind of mention now those are the general that's a general um structure for it anything else that's the case by case for the business the lender would approach it but it's that's just the general norm for it great um can you apply to more than one lender yes you can but i would not recommend it because what happens is you're filling out applications with multiple lenders everybody's trying to submit it through to the sba and you're gonna see a bunch of rejections and it's going to make it very difficult because you're going to have to try to figure out which one of the lenders actually got you the sba approval number the back end technical assist technical system when you're applying multiple times there's a lot of technical issues and glitches that are happening and it could end up causing quite a bit of delay in your ability to get the funds i would recommend that you pick a lender that you feel comfortable with and not applying to a bunch because it's a lot of wasted work on a lot of lenders and you're possibly taking away an opportunity for another small business to get access to this program if you're doing so so that's my personal recommendation but from a rural standpoint yes ou can if you give accommodation or other benefits as part of service to employer can this be included in the claim um i don't believe so brian if they do accommodations or other types of stipends um do you know if that's considered part of the compensation or benefits no i haven't i haven't read any guidelines uh pertaining to that it's um just your general payroll cost yeah i think it's just wages and just standard compensation and then the health and retirement that the company pays for and state unemployment correct is there a schedule c for an llc two so an llc can file um their taxes in many different ways they can file as an uh a schedule c a 1065 partnership or as an s corp election so it's all based on how you file taxes for your business there's three different tax forms that you can be using as an llc if the business was in operation on february 2020 but i purchased in august i think we already answered that question it just depends on whether or not the previous owner applied for ppp draw one and draw two and if the business was eligible for ppp but it's all business-based not owner-based do you have to have reduced income of each of three months it's the whole quarter so you take the total amount for the quarter and compare it to the previous year the same quarter and it's it's not per month it's the total 25 over the three months together in the quarter and remember that it's calendar quarters you can't just pick any three months amber we're getting close on time but there's there's another question i see in here definitely want to touch on real quick it says if i got a loan deposit in april 2020 that's the beginning of the 10 months plus eight to 24 weeks um can you answer that i think they've got the the time frames flipped on that yep it's flipped so the the covered period starts when the funds are deposited into your bank and the covered period is 8 to 24 weeks and you get to choose the length and then after the end of the covered period you have 10 months to apply for forgiveness to be eligible for 100 forgiveness if you don't apply until after the 10 months you can still get forgiveness it just won't be at 100 you'll have had to make your first payment until you applied i think there's a question again about the uh the s corpse so if you're an s corp um you are not going to have self-employment income because you're considered a corporation you need to use w-2 wages so if you're an s-corp or if you are a non-profit organization it's solely based on the w-2 wages that you pay excellent well we are up on time amber thank you very much brian thank you very much we appreciate your expertise on this topic just a reminder folks if you go back into our archive we have today's session but we also did sessions in week 37 that's the session that amber walked through the application process in a little bit more detail and then as well in week 38 we had another session on paycheck protection program um so both those weeks you can go back and review those we answered a lot of questions and those as well um a lot of the information was also shared in today's session um but those are the most recent if you go too far back on the ppp webinars from any person that's done them oftentimes the rules have changed so you always want to uh look at the more recent versions of it based on the rule changes that have come up but those are out there available for everybody um again as we wrap up i want to thank amber and brian for being with us today and sharing their expertise if you have any questions feel free to reach out to amber and her team over prestamos they do a great job and we appreciate their uh their partnership with us on the presentations uh with that that's reminding everybody we have our boot camp tomorrow morning 9 a.m please feel free to join us and then we have our special session next week as well on the employee retention credit so with that uh have a great rest of your day and we look forward to seeing you on future sessions thank you thank you