How Can I Sign Arizona Banking PDF

How can i industry sign banking arizona pdf online

see a small business boot camp and resource collective for this thursday january 28th uh we're excited to have you here uh i am robert theobald the small business ombudsman and vice president of small business services at the arizona commerce authority we want to first start by thanking all of our community partners we could not do these boot camp sessions without their help support expertise time and effort they are essential to the boot camp success and we appreciate them very much so the small business boot camp and resource collective is designed to help small businesses work through the covet uh crisis and return stronger than ever it is a statewide initiative involving the community partners from all four corners of the state and the boot camp and resource collective is set up on our website with a lot of great information the webinars the registration for the webinars are on this page you probably went there to register for this session but also included is the link to the resource collective and the archive of all the previous sessions today's session 115 but we have well over 115 sessions when you include the special sessions we've done and all the sessions are recorded and available in the archive that can be found on this website now you can go back and re-watch them or watch them for the first time we include the slide decks that the presenters shared with us so there's a lot of great information as i mentioned you can also find the resource collective on that page and this is a link to it as well the resource collective is a page set up with tools and resources brought by our community partners to help small businesses work through the coving crisis now this is just an example of some of the resources that are available on that page you've got insurance guides you've got guidance for retail guidance for barber shops and cosmetologists restaurants construction manufacturing there's a lot of great tools and resources to help all different industries go through a couple quick updates i just want to remind everybody that the ppp lender list is available that is put out by the sba the sba district office with the arizona lenders that are doing ppp loans additionally the emerge a z fast grant is available for startups and tech companies it's a great program there and then the city of glendale and prestamo cdfi just joined together to provide the pandemic response small business assistance program for businesses in glendale so that's another new program providing some funding to help support the glendale small businesses additionally to stay informed of those grants and other grants you can find them on our covid19 arizona business resources under the financial resources section but this website also has business guidance and updated information to help support businesses throughout the state during this period additionally the aca has a number of different programs to help small businesses throughout the state our small business services can help navigate with the sba working with the small business development centers or sbdc's working with score local banking contacts etc there's a number of great no-cost business counseling programs we can help guide you to as well our work first our workforce division can help your small business as you look to hire employees or to train and upskill your employees they have a number of programs to help with that and then the manufacturing extension partnership works with manufacturers throughout the state uh small medium-sized manufacturers looking to grow expand uh fine-tune their their processes and procedures they have a great nationally recognized program and we highly recommend reach out to them if you're a manufacturer additionally this time a lot of people are looking to start side businesses or start full-time small businesses and our small business checklist is designed to help entrepreneurs with identify the licensing registrations compliance opportunities related to opening a small business both at the local state and federal level um lot of great information on this checklist very in-depth and can help guide you as you work to open your small business additionally the state's coven 19 information resource page has a lot of great information not just for businesses but for all facets uh related to cobit 19 now you can find that at arizona together.org so a quick look at next week's sessions we have two great sessions by our partners at the small business development centers tuesday's session will be brought to us by the yavapai college small business development centers uh on 10 steps to starting a business in arizona and then on thursday the small business development center from maricopa county is going to be with us talking about cash flow management knowing your cash position position during coven 19 we're also looking forward to that session with that uh we'll turn the time over to our speakers for today we have tom fulcher uh founder of the idea gardener and carrie anne todd with beach fleischman we are going to touch on ppp again today and they are two of our experts that have been very helpful with us throughout the pandemic so we're grateful to have them back again so carrie ann and tom we'll turn it over to you all right thank you robert for the introduction thanks for having tom and i today uh let me get my slides rolling here well carrie ann's getting her slide set up if you have questions please place them in the q a box at the bottom of your screen also before you ask the question i recommend listening to the the presentation because many of your questions may get answered uh throughout but we will have some time at the end for some ppp questions all right um okay so quick little disclaimer here you know this program is changing it's changed 50 times since it was first authorized with the cares act back in march so everything you learned today is just current as of today um so if you're you're coming back and looking at this in two months and watching this uh in the archives just keep that in mind that there might have probably was something that changed so the today's january 28th this is also really high level so i have a ton of slides there's 83 slides in this presentation um you know tom's going to speak about the eidl programs and the shuttered venue grants i'm going to touch on ppp and then employee retention credit we're going to try to stay really high level just because of the time so that we can leave time for questions at the end so if you have detailed questions you probably need to consult with a cpa or your accountant or whoever you go to your business advisor for more details okay so ppp loan forgiveness there's a lot of math and and i it's not hard math it's just a lot of math and a lot of things you have to get through and i would say the exact same thing about the employee retention credit that we're going to talk about at the end um so if you just kind of accept the fact that it's a lot of calculations and then just work your way through the program step by step i know you can do it i know you can get to forgiveness um but it may be something that is not you know in your wheelhouse something that you're comfortable with so just kind of walk it through and you'll get there okay so the consolidated appropriations act that's the new bill that was signed right after christmas in the end of 2020 changed some of the loan forgiveness rules okay on january 19th the sba released re revised loan forgiveness applications that incorporate the changes those forms can be used by anyone to file for forgiveness whether you are filing for forgiveness on a round one loan or a round two loan those are the forms that they want you to use going forward so there's a link there for you to go out and get the most recent forms okay in my slides like i said there's a lot of them and we're not going to cover all of them because we literally just can't but i try to put a star this cute little red star on any slide where there's information that's new and different that came out of that legislation okay so this is one of the new and different things form 3508 s which is the form that originally was only for loans up to 50 000 can now be used for loans up to 150 000 so while in some ways that's a good thing because it's only one page they didn't change the rules for all the loans between 50 thousand and a hundred and fifty thousand so all the nice breaks from the rules that were given to the loans under 50 do not apply to the loans between 50 and 150 even though they're eligible to use the 3508 s which is a one pager so it's important when you read the instructions if your loan is less than 150 000 you need to read the instructions to that 3508 s and make sure you understand the rules that still apply to you the main one being the fd fte reduction rules and the wage rate reduction rules and we're going to talk about those briefly those rules haven't changed um so if you're completing the 3508 s because you're less than 150 000 you if you qualify for if you would have qualified for the 3508 ez and if you look at the 3508 ez instructions you'll see that if you did not reduce wages and you were unable to operate or you didn't reduce ftes then you were kind of exempt from some stuff those rules of the 3508 ez kind of apply to the people between 50 and 150 and you can see the confusion here right i almost wish they would have just created a new form and called it something else because it's like now they have 3508 s and there's two separate rule rules you have to follow under 50 and then 50 to 150. so if you don't need any of those exemptions and you're in this range then if you did reduce ftes and you don't qualify for the unable to operate exception the costs that you submit eligible for goodness are going to be reduced and we'll talk about that more more detail here shortly but all of these rules are outlined in the instructions to form um 3508 so if you really want to know all the rules what they are they're on 3508 okay 3508 ez can give you some of the exemptions and 3508s is the one pager that you would file so it's almost like you have to read all of them to really understand how you're supposed to fill out the 3508 s and from that perspective if i feel like they made it more confusing even though it's it's technically a one form so just be aware of that so the basic concept of ftes if you recall the purpose of the ppp program was that the government was giving you money to make sure you were able to make payroll and you didn't have to lay people off okay and the concept was don't lay people off and if you lay people off there's going to be a slight penalty in the forgiveness formula okay now a lot of companies can get over that penalty mathematically because of you can use up to 24 weeks of wages but it's just something to keep in mind that you have to maintain your same level of employees in order to not be hurt in the calculations so anytime we're talking about ftes it's based on a 40-hour week so my examples here joe's 30 out of 40 he's a .75 mary works 20 hours a week she's a 0.5 bob works 55 hours a week he's a 1.0 you can't be more than 1.0 so any time in those forms when you see the top them talking about ftes this is what they're talking about for each and the employee what what are they equivalent to in a number now they did give you a simplified method if you didn't want to go through and look at what every single person works to figure out their fte you can basically block your employees into two categories anyone who works 40 hours or more is a 1.0 and anybody who works less than 40 is a 0.5 and this actually this formula is really helpful for the hospitality industry to easily segregate your employees and not try to figure out their average hours work because as you know that changes all the time so consider the simplified method um so owners get excluded from all the fte computations and i'm kind of that's kind of all i'm really going to say about ftes i just wanted you to understand when you're looking at the rules what they're talking about when they're talking about ftes okay so let's talk a little more about wage rates and all these slides will be in the presentation that um lisa and faith will distribute after the presentation so you're still gonna have all that information um i just wanna make sure we get through the highlights today so that um like i said we're gonna stay high level so the other rule with the program is that they don't want you to reduce anyone's wage rate okay and when we talk about wage rate we're talking about base salary and base hourly rate okay and so again because the government is giving you money through the ppp loan to fund your payroll one of their requirements is do not cut people's wages okay don't cut their hourly rate and if you do excuse me if you cut it more than 25 there is a reduction to be applied to your cost eligible to for forgiveness okay so there's sort of a penalty again with 24 weeks of wages sometimes you can overcome that penalty but if you do reduce wage rates more than 25 regardless of the size of your loan you have to file form 3508 okay under no circumstance can you file the 3508 ez or the 3508 s so that's something to consider when you're if you're going into ppp2 and looking at what you're going to do forward with your um the compensation that you pay to your employees you need to keep that in mind so here's just a basic example for joe he's full-time he makes a thousand dollars a week but you cut his salary to 650 okay he's still full-time but he's this makes less so in this case the program allows you to reduce joe's wage joe's salary to 750 a week but you reduced it to 650 a week so it's a hundred dollar penalty per week multiplied by the number of weeks in your covered period i just used eight as an example here so if you if you're going to claim and report eight weeks of cost the penalty just for joe would be eight hundred dollars and as you can see this is applied on the individual employee basis which it gets into a lot of math okay so kind of the moral of the story on wage rates is is just don't reduce the wages more than 25 and you don't have to deal with any of this um here's a quick example for mary she's hourly so when someone's hourly you're just looking at their rate okay you're not looking at their hours because hours can go up and down you're just looking at their rate so in this case mary was making 20 dollars an hour so under the program you're allowed to reduce her to 15 without penalty but in this case we reduced her to 13. so that's a two dollar penalty per hour per week that you report just for mary okay so hopefully that makes sense in the revised application instructions they are saying that the base period for comparing rates would be the most recent calendar quarter in the covered period so um if you haven't yet applied for forgiveness on round one your base your base quarter is going to be q1 of 2020. if we're talking about a ppp2 loan a second draw or an initial first draw for ppp2 and you're going to get the loan sometime in the next three to four weeks your base calendar quarter is going to be fourth quarter of 2020 okay if you happen to get a loan in april of 2021 well you can't actually because the program ends right march 31st so for everyone in the second round of ppp2 your base quarter is going to be the fourth quarter in 2020 when you're doing this wage rate comparison okay all right that's all we're going to talk about those two and those two quote penalties they're not really like i said you can kind of overcome them mathematically if you have enough costs so don't get nervous about that um but do keep those things in mind as you're going into your next covered period on ppp2 that you need to be cognizant of keeping your employees not cut you know not doing layoffs because the government's funding your payroll so they want you to keep everybody on the payroll and if if you're going to reduce wage rates you need to keep those reductions below 25 okay also on your loan forgiveness application you can report you report all your costs right they're called covered costs and that's a technical term that you'll see on all the applications and the application instructions and there are ei ht categories of costs that you can report okay the four original categories are payroll costs rent interest and utilities i have slides on here on what those are and we're not going to spend a lot of time on them if you go back to some of the presentations on the boot camp that i did in the summer they'll go through the forgiveness details and these costs in detail um or you can read the instructions i mean they're pretty good now about what qualifies and what doesn't but we're going to talk about the costs that were added by the caa okay the consolidated appropriations act covered operations expenditures covered property damages covered supplier and covered worker protection expenditures okay you may or may not need these but they are categories that have been added okay so here's like i said there's slides on payroll costs i will point out one thing okay two things actually so when you're going when you're looking forward even if you're looking back you cannot claim wages for multiple programs okay so there's the ppp there's the family's first coronavirus response act the ffcra which had a tax a payroll tax credit for qualified sick leave and qualified family leave and then now there's the employee retention credit you cannot count wages for multiple programs so if you count wages for ffcra those wages are locked into ffcr8 they cannot be encountered on ppp or erc okay if you count wages for erc those are locked out can't use them on ppp or ffc rate you see where this is going here right i'd have this as double dip but really now that we have the erc it's a triple dip you have to allocate your people's wages between the programs you cannot count them twice okay um so rent utilities interest all those slides are here let's talk about covered operations expenditures now i have given you these um text exactly from the instructions to be honest with you in the actual consolidated appropriations act which is very long and very detailed there's a lot more information this is kind of the summary of what that means so if you're not really sure honestly you need to find somehow to dig into the regulations if you really need additional costs i think in most cases you're going to be able to get forgiveness with just payroll and maybe your rent maybe your utilities you may not need to dig into this um but maybe for restaurants who are now getting three and a half times um their average payroll they might need to dig a little deeper so anyway so covered operation expenditures here is basically for software cloud software i mean you could get really broad here if you read this tracking of payroll expenses okay does that mean my adp or my paychecks bills human resources if you outsource that sales and billing functions okay does that mean my quickbooks fees if i pay that during the covered period those are things you need to look at the next category is covered property damage so this is very specific okay so it's cost related to property damage and vandalism or looting due to public disturbances that occurred in 2020 that were not covered by your insurance or other compensation okay so that's the definition but be clear you have to be making these property damage fixes during your covered period okay so ppp1 that's probably easy right because your covered period was over the summer that may have been the time you were fixing the damage if you're looking forward to ppp2 it would only be residual damage that you're fixing and paying for during your 2021 covered period related to vandalism that happened in 2020 so make that distinction it's not saying on your on your pbp2 loan um a second draw you can you can count all this stuff from 2020. no that's not true it's only what you pay in 2021 that's related to 2020 damage and i know in arizona that wasn't a huge concern it was a bigger issue in other other places in the us okay covered supplier cost so this one is very confusing um you can see it's a very long definition so kind of the way i look at it is think of it as you can get you can include the cost of your inventory as long as you had a po in place before your covered period so i what they're really saying is if you for whatever bills you had in your ap accounts payable before your covered period if they meet this category requirement and you pay them during your covered period the eligible costs so like if you're a restaurant and we're talking about food there's a special rule for food so it's potentially things that are inside your cost of goods sold but you really need to read this definition and make sure you understand that and it's twice as long in the actual uh legislation okay covered worker protection expenditures this one's going to make way more sense to everyone um it's operating your capital expenditures that facilitate the adaption of the business activities of an entity to comply with the requirements blah blah blah okay it's ppe um sneeze guards i know that's not what they're called but you know the plexiglas that you put up to keep everyone safe all of that stuff that you had the physical alterations you had to make to your business costs for that again if they're paid for during the covered period are includable and then the ppe right the masks the hand sanitizer all that stuff this is the category that makes sense to everyone um okay and then the last oh it keeps going on and on but um everyone understands this one even though the definition is the longest so again the important distinction here is that all eligible payroll non-payroll costs have to be paid or incurred during the covered period so when your your covered period starts the day you get funded and it ends any time between eight and 24 weeks after that day it's your choice okay all right so i'm going to kind of skip through the rest of these slides they go into a little bit more detail kind of the restrictions and the rules and the formulas and all that stuff but i want to hop over to tom here and talk about the eidl programs for a little bit because i know those are those are both kind of confusing and i want to make sure tom can explain all those for you all right take it away tom sorry about that it was muted we're going to talk about multiple aspects of idle and a couple other programs we'll start by looking at idle advances um so they're part of the karzak program and prior to the december 27th 2020 when president trump signed the new caa the company of ppp loan had to reduce the amount of forgiveness by their idle advance so you may recall the idle advance was one thousand dollars per employee up to a ten thousand dollar max the recent rules have reversed that so if in the past you had a you know seventy thousand ppp and a five thousand idle advance your maximum forgiveness was going to be 65 000. that is no longer the case so any business that had the forgiveness reduced will be made whole in 2021 and that's a bit of a you know what does that mean exactly and you know we're waiting to see exactly how that's going to work sorry that not cooperating fully uh so the advances as we said don't have to be repaid there we go and they are not taxable and in terms of uh anything it was used for again those are still deductible so if you had an idle advance and you haven't played for forgiveness yet it's kind of a don't worry about it the lender should make that whole if you've applied for forgiveness receive forgiveness but not started paying on that again you should be okay your lender will work the sba that'll be made whole and i've worked with some companies that have applied for forgiveness got it reduced and are making payments again that money related specifically to the idle advance and interest related there too will be coming back to you and you'll be made whole as the slide said and you know if you have a loan beyond the idle advance that still remains alone you still have to make payments on those we're not sure the exact process on this yet but we know that the sba is going to be working with lenders to get this taken care of so my main advice on that is stay in touch with your lender and you know stay on top of that from that perspective so now we're going to touch base on idle loans and they are separate from the idle advances so any company that applied for receiving idle loan in 2020 received up to 150 000 there was a very very small window before that cap but some companies may have received additional and these terms are fixed this is a loan it's not forgivable it will not be forgivable 3.75 interest if you're a non-profit 2.75 percent uh 12 month full year delay in payment and a 30-year amortization without any collateral requirements uh the idle loans as i said it's real loan you have to repay it no forgiveness all right so we want to just keep stressing that because i know i get asked that a lot i think a lot of people were hopeful that with the new bill maybe that would change but it did not the idol itself was extended through 1231 of 21 or while supplies last i just want to stress this was an extension this is not a new program so while nothing has been written to date you know saying xyz relative to second idols do not expect to be able to go back and get another idol this is simply a program extension timeline so there's no real rules that said oh you can now get a second idol so i don't expect that i will say the idol advance was not extended so if you've not applied for an idle and you go apply for an idle now you will not see the checkbox that says do you want to be considered for an advance that program has sunset so let's talk about the new targeted idle advances in grants and i boy i cannot agree with carrie ann moore uh we needed a little more creativity and what we named things uh again like her i wish this was named something other than target idol advance sometimes in the law it's called idle grants and it's caused a lot of confusion but there are two forms of this target at idle advance the priority one group you receive an idle loan you're located in a low income community and you've experienced at least a 30 reduction in gross receipts for an eight-week period march 2nd of 2020 through the end of the year all right and you know part of this is you do not already receive a ten thousand dollar idle advance so that's priority group one so they can receive if you're in this group you can receive a grant that when combined with any advance you did receive will total ten thousand dollars so if you received your loan but no advance you'll get ten thousand dollars if you received your loan and say a three thousand dollar advance you'll get seven thousand dollars if you see your loan and a ten thousand dollar advance there's no additional money for you but what if you're not in that priority one group there is a priority two group these are people that received an idle loan prior to 1227 of 20. i should these are companies but did not receive an advance at all in priority two group they will be eligible for one thousand dollars per employee up to ten thousand dollars max so it looks more like the traditional or original idle advance but again they're priority two so um and i say it's unquote new idols we don't expect new idols to be able to get the grants but you know that hasn't been issued yet and you'll see the words sba outreach and what does that mean well what the sba has told us is that they're going to run their reports on who in this time period last year received an idle loan and received less than ten thousand dollar advance and then they're going to compare for the first priority group to compare that to you know the 30 reduction gross receipts i'm sorry to locate low-income community they won't know the gross receipts and then they're going to send out their sba is going to make contact with you and if you're in priority one or party to give you the opportunity to apply i'm a little concerned with this process because if they're comparing you to your census data i don't know if that will show them you know your business is in a low income community if your mailing address is not so i'm not quite sure how this will work they haven't clarified timeline but at this point the only message is nothing you need to do at the moment other than know your own history there's nothing you need to do the sba will do an outreach and hopefully they'll come out with more information soon on this program so sba debt relief touch base on that one if you have an sba 7a 504 or micro loan this is not a for regular lender loans you know if you've got along with the bank that's not sba this does not apply to you if you had that loan last year and it was approved by the sba prior to 927 of 20 you should have already received six months of debt relief and what that means is the sba paid principal and interest for you on your behalf directly to the lender you didn't have to pay it and that was they use the phrase automatic if you are in that situation you can receive an additional three months beginning in february of debt relief if you are in a certain group of next codes and uh you know robert if you don't have those i'm happy to send them to you and you can post them if you're in a certain group of next codes beyond that three months you can receive five more months so a total of eight months of additional debt relief and again they're saying it'll happen automatically here's the the bad news if your loan was approved by the sba from 9 28 of 20 to 131 of 21 currently under the current rules you do not qualify for anything um now will it come back to six or nine months i don't know i'm very hopeful it will because if you've got your loan going forward from february 1st to 21 forward you will qualify for six months so this doughnut hole doesn't make a lot of sense to me that just because you got a loan from 9 28 to 131 everyone before you get something and everyone after gets something and you don't doesn't make a lot of sense so i'm hopeful while there's been some procedural notifications from the sba they haven't issued a lot of faqs on this and guidance so i'm hopeful that guidance will take care of that again this is automatic is the phrase they use but don't trust to automatic you know have a good relationship and good communications with your lender finally just to touch on shuttered venue operator grants these are specifically for nix 71 arts and entertainment and recreation so just like in ppp there is additional funds for nick 72 food and accommodations this also targets a specific group you can see that list but you know it's anyone in that performing arts space museums all kinds of people meet the eligibility requirements little change they had to be in operations february 29th as opposed to february 15th and they they can't have received a loan at ppp before 12 27 but they cannot get a ppp after 12 27 and qualify for this program uh so this program requires you in operation by january first of nineteen and you can get forty five percent of gross earned revenue or ten million dollars whichever is less now again on this program we're waiting for additional guidance for example gross earned revenue what does that mean exactly if you're a non-profit you may have contributed and earned revenue so it only counts potentially the earned portion of that if you began operation after january 19th you also qualify and there's just a different calculation so as you can see this will allow these groups in this next code uh a greater amount of money they do have priorities so for those that received a 90 are experienced a 90 reduction or more in gross earned revenues and as you know a lot of shuttered venues be they movie theaters or performing arts concert halls even some museums did uh they are the first 14 days they can apply the next group is those that received 70 plus can apply in the next 14 days then 25 reduction are next after that first 28 days and then there's also some supplemental funding there's no application yet there's no additional guidance on this yet there is allowable use of funds and prohibit prohibited use funds that are out there and there are many open questions around this it's a very very complicated piece of regulatory and uh you know i just mentioned one earned versus contributed revenue so it's a great program we're excited about it and t e good news if you're not in this is because these shuttered venues will be receiving this they will not be taking a part of the ppp funds that are available to everybody else so i think we are done with that and i will give this back to carrie anne get myself back online here okay i think i'm back in controlling and we're going to talk about we're kind of switching gears here right so because the ppp um the ppp and the eidl those are all um not real they have they're tied to payroll but they're not payroll tax credits so you know make sure you understand we're switching over to the employee retention credit which is a payroll tax credit okay um so the consolidated appropriations act like i mentioned before did two things um it removed the prohibition against companies who receive a pvp loan from taking the erc what does that mean when the cares act first came out it said here's a pvp loan here's the erc you can do one or the other okay anyone who is eligible for the ppp went for that anyone who was not or couldn't get in or didn't get their loan did the erc okay in december they said oh wait do over um all the way back to the beginning now you can do both programs and then they also extended the erc through june 30th of 2021 and then they modified the rules for 2021 okay so we're going to talk through those um pretty quickly here so that we can leave plenty of room for questions how are we how are we doing on the questions do we have a lot out there for some reason i can't see them right now i've got one i'm typing an answer for that one right now okay all right so we're good so the employer retention credit is computed using eligible wages and allocable health care costs okay eligible wages are generally gross wages paid during the relevant period allocable health care costs are costs for insurance they're related to the relevant period so they could be paid earlier or later right so think about wages they're paid as they're earned right but your healthcare costs you might pay your health insurance bill if you pay early before the due date maybe it won't the payment won't fall within the relevant period but the coverage is for the relevant period so the eligible wages paid is all about paid allocable healthcare costs is all about coverage so those are kind of two different distinctions when you're looking at costs the credit is available from march 12th to december 31st of 2020 as well as january 1st to june 30th of 2021 the eligibility and the computations are different okay and we're going to address each year individually um so we're talking about 2020 first okay so everybody get in the mindset of 2020. so there's two different ways to be eligible okay you had operations that were fully or partially suspended during any calendar quarter in 2020 due to government covered related orders the credit only applies to wages paid during the portion of the quarter that the business is suspended not the entire quarter okay so um you know if you whatever you were if you were retail whatever you were and you were you were only affected for eight weeks it's only that eight week period if you're a restaurant we're looking at the whole time right you were shut down from whenever they shut you down until probably now because nobody i don't think in arizona is back up to a hundred percent capacity so restaurants any retail anything like that that is still kind of affected by covered restrictions is going to easily meet the first bullet okay if you didn't meet that let's say you were an essential business or um you know you just weren't directly affected by a kovach coveted order shut down you might meet bullet point too and it is an ore so notice that there okay if your business experiences significant decline in gross receipts during any quarter in 2020 and the significant decline is considered to be 50 or more and we're comparing ourselves to 2019 so let's pop over to an example of the gross receipts test okay the the coveted shutdown i think is pretty explanatory we've all kind of understand that now um so you're going to use the same accounting method that you use for internal accounting because of course you're going to have to look at your revenues quarterly if you're able to okay if you don't have detailed enough accounting records that you can look at quarterly that's okay if you look at annual and look at and you meet the 50 test you can also qualify okay so don't think that oh man i don't keep my records that close i'm out you can look at your annual records so here's an example um you can see an example one that for in the first business in in the first quarter their revenues were more in 2020 than they were in 19. in the second quarter they were down and their 2020 receipts are equal to 42 of their q2 2019 receipts i remember we're talking lots of math here okay so because they're below 50 they're eligible for q2 now you stay eligible until you get back over 80 okay so the relationships here is we're dividing quarter two by we're dividing 2020 by 2019. so you can see for q3 we're right at 50 and for q4 we're at 75 percent so we're doing better right we're still eligible for the erc because we haven't gotten back to the 80 percent level if you look over here at the example two um you know we're eligible here in the second quarter we're eligible here in the third quarter but we're not eligible for the fourth quarter okay because that we're the first quarter where you get past 80. okay so those are some examples of how that works um so wages costs are eligible for the credit is dependent on how many employees you had so it's it's a better credit if you have less than 100 full-time employees in 2019 and what's really exciting and you're gonna love this is the math to figure out a full-time employee is totally different than the math you use on the ppp okay so the math is totally different under this program a full-time employee is someone who works 30 hours or more per week and you only count those people so if someone works 20 hours a week they don't even count you only count the people that work over 30 hours a week that's how you get to figure out whether or not you have 100 or more than 100. and you see the math here i kind of go through that um there's a lot more information the irs faqs on the erc they have not been updated for the this new program the new changes from the caa and the irs website tells you that in big bold letters but the original erc faq has 84 questions um and they're kind of segregated by category so if there's a question you have odds are the irs has answered it in these faq so they're actually a really good resource i probably go there six times a day with different questions so you definitely use that so if you have less if you have 100 or less full-time employees in 2019 okay all of the wages including health care costs paid during the affected period or quarter and after march 12 2020 minus any ffcra wages okay those are the wages that are eligible employers with more than 100 employees you're not out but it's limited you can only take the credit on wages and healthcare costs paid two or four employees who are not working and by that we mean literally paid to stay home and not do anything okay and there were some businesses that had that scenario in the um early second quarter right of 2020. so you might not be out completely so once you figure out whether you what category are you in 100 or less 100 or more i should say 100 or less or over 100 and you figure out which wages those are then you compute the credit the credit is 50 of the first 10 000 of wages and allocable health care costs okay so the maximum credit is five thousand dollars per employee for 2020. okay there's four restrictions and we're going to pop through these pretty quickly but go back and read these slides so you understand the restrictions restriction number one you can't include wages that you're going to use for ffcra or the work opportunity credit okay and then this one is key here wages i don't know if i can highlight here i don't think i can but um wages paid to relatives or family members generally do not qualify so if you go to that faq it talks about which relatives are out but it's basically um like wives brothers sisters and kids and then there's some other ones that apply so if you have a lot of family members in your business you need to make sure you understand that list because you can take credit for the owner but you can't take credit for all the relatives all right restriction number two um i'm so sorry for that uh little errant circle here any wages used in the competition of erc are not eligible costs for ppp and i mentioned that before and people forgiveness if you have already gotten forgiveness on your round one loan but you find out that you're eligible for the erc there's no rules yet on what you can do okay right now you you're only able to look at the wages outside of your covered period that you did not report on your ppp application those would only be the only potential wages that are eligible um we're waiting for some guidance from the irs and sba to basically say to give you a do-over and to go back and figure out okay how can i maximize the erc and maximize my ppp loan forgiveness okay but we don't have that yet so if you've already gotten forgiveness don't hurry and start calculating we kind of need to wait to see if they're going to fix that restriction number three there's aggregation rules on related party entities so if you have you have multiple businesses or you have vertical ownership if you're complex if your structure is complex you need to read about these aggregation rules okay because it it affects how you calculate everything and also how you calculate your decline in gross receipts oh i thought there were four i thought i had a fourth restriction anyway maybe i skipped over that okay so you claim the credit on your quarterly 941 um there is a form 7200 where you can request an advanced credit there if you click on this link you can get to the irs website on how to claim the credits and i'll walk you through that um okay there's an article on our website that kind of walks through it in more detail and again the irs has this super extensive faq on the employee retention credit that's very valuable so that's the basics of 2020 credit okay now let's so let's say you look and you're like oh you know i missed the vote on that i don't qualify i didn't have a 50 declining receipts you know i have over 100 employees that's not worth it to me to go back and figure all that out okay all is not lost you might be able to take the credit for 2021. so it works pretty similar well it works pretty much exactly the same way for 2021 but the the metrics are different meaning the the percentages okay so once again to be eligible you if you had a full or partial shutdown okay that's still there or you had a declining gross receipt but now we're looking at only a 20 decline and again we're referencing 2019 as our base so if you're going to look at the first quarter of 2021 you're going to reference your gross receipts in the first quarter of 2019 okay so make sure you understand that all the base references for the most part are 2019 okay so once you do that um let's see these are all the same slides as before so here's our example here um in when you compare 2021 gross receipts to 2019 first quarter is only 70 of 2019 so that's eligible second quarter is only 75 percent so that's eligible right because the bar is 80. there is this funny little a look back rule which says if you don't pass it for the first quarter you can do a look back to the fourth quarter and so here's how that would work you would look at your q4 2020 gross receipts and your q4 2019 gross receipts and if that relationship is below 80 then you're eligible for q1 of 2021 okay and then you would have to assess q2 independently i believe okay so that's a funny little look back rule okay other than that everything all the slides from here out are pretty much the same and anything that changes i've highlighted in yellow okay so remember on the 2020 credit the employers with 100 or less got the bigger benefit well now it's 500 okay that's a huge difference that brings in a lot of companies so if you have 500 or fewer full-time employees in 2019 again we're looking at 2019 again okay so keep that in mind all this is back to 2019 which gets confusing you get to lump in for everybody okay if you have over then fight over 500 employees you can only take the credit on wages and costs for people you paid to stay home and do nothing okay so that's a big distinction i don't know that anybody in 2021 is paying people to stay home and do nothing we may be passed up okay what's the credit it's 70 of the first 10 000 in wages and you compute each quarter independently so if you qualify for q1 and you paid someone ten thousand dollars and you qualify for q2 and you paid someone ten thousand dollars you're going to get 14 000 for that employee all right so it's a much more lucrative credit and it's easier to get as you can see by the percentages all the restrictions are still the same okay the way you claim it is still the same the key here i would advise going forward is figuring out how you're going to get there right because it's january 28th you don't know what your first quarter gross receipts are gonna be so in the first month of april or first week of april sorry you're gonna have to sit down and look at your gross receipts for the first quarter okay do i meet the test if i do meet the test should i take the erc or do i need to save these wages if i got a ppp2 loan okay so those of you who are going to get a ppp loan in this second round if you're going to get funded in the next week or two you see there's some overlap so you know look at the first quarter figure out where you get the most bang for your buck and you're kind of going to have to project out your payroll and try to figure that out if you need the wages for ppp which is a dollar for dollar benefit right for every dollar of wage you put on that ppp application you get one dollar of forgiveness if you use that one dollar of wages for the erc program you're going to get 70 cents now if you do that if you work the math right you can probably take at least all of the first quarter erc and maybe only have to use your and maybe have to use your second quarter wages for ppp but there's a way to work it to where you can take advantage of both but just remember you can't double dip or triple dip because ffcra is still in play too so okay so that's all i had on my slides here so um do we have any questions i think i have to stop my share in order to be able to see questions yeah there's two good questions a couple good questions in there so okay if a business was established during the pandemic will the business be qualified to apply for eidl or ppp tom do you know the answer on eidl eidl it had to be in operations january 31st 2020 so i would suspect that the answer is no for this particular business if they did not start and get in operations until june of 2020. okay and i believe for the ppp loan you had to still be in business by february 15th of 2020 correct um so for this business i would recommend you try to go after the employee retention credit because i don't believe you're going to qualify for either one of those programs okay [Music] round one was he's 100 for payroll the funds ran out in four weeks we submit documents for the full 24 weeks or until the funds ran out okay so one of the other changes that came with the caa that i didn't really highlight on the slides is you can pick your covered period okay so before the program was 8 or 24 right now if you haven't applied for forgiveness yet elizabeth when you go to apply for forgiveness you can pick your covered period and that really helps if you're trying to balance the erc and the ppp right so you might say okay well i'm going to include these only these 12 weeks of wages if that gets you to full forgiveness and add in some rent okay and that leaves you with more wages to use the erc on if you qualify for that so when you do your forgiveness application now it asks you to define your covered period and carry on she's mentioning in here the idol advance f 10 000 which as we said no longer reduces ppp my concern is she says the idol advance was also used for payroll so this is a tricky situation you you can't claim the ppp forgiveness on that 10 000 if it was not paid with ppp so you got to be very careful with that and without more details it's hard to really answer it but yeah you're you've set your own 8 up to 24 weeks forgiveness period covered period okay and then i think we asked that last answered that last one about if you started a business in june 2020 yes we do and also for elizabeth you know with uh 14 weeks if at 14 weeks that's the end of your covered period that's also when your 10 months starts to apply for forgiveness your covered period right right right okay excellent okay we've answered all the questions no there's one more i received a ppp in 2020. it was forgiven i sold the business am i eligible for ppp2 only if you have a new business and only if that new business got pp1 well there's still so if if you have a new business that did not get a first round you can get money out of ppp2 under the first round rules first draw rules right yeah under the first draw rules so you cannot get a ppp2 on a business that you do not own anymore the new owner of the business that you sold was potentially eligible for a second draw on on that business if that makes sense yeah and that questions come up a lot it may hinge on if it was an asset sale or equity sale okay ppp loan application requires that you spent all of ppp1 we did not spend the entire funds but we did spend it on covered expenses the answer to that is yes so there's no requirement that you spent all the money during the covered period the requirement is that you have spent it all on eligible expenses before you file your application for a second draw so if you're if you want to apply tomorrow as long as you spent all the money by today um or yesterday you're in good shape okay look at that 10 59 or 9 59. i think we're we're doing good today robert right on time perfect timing great um so thank you carrie anne thank you tom great information shared today we appreciate the time you put in preparing for this and preparing the slides and presenting with us so thank you very much as we wrap up i want to remind everyone uh you can find the recording of this will be on our website on the small business boot camp website lisa posted that link in the chat so you can go to the chat you can find that same place where you registered for this session additionally we have two great sessions planned for next week so please register for those and join us on a tuesday morning at 9 a.m until then please have a safe and enjoyable weekend uh with some of the moisture we're supposed to get in arizona so uh be safe and we look forward to seeing you next week thanks and have a great day