How Do I Sign Missouri Banking Emergency Contact Form

How do i industry sign banking missouri emergency contact form

[Music] hi welcome to evaluationpodcast.com i'm your host melissa gregg and i'm a financial expert witness in st louis missouri i have the pleasure today to discuss the ppp loan forgiveness process today with mark nicholas he's a cpa and a forensic accountant with a 28-person accounting firm in st louis as well as bloomington and decatur illinois welcome mark how are you doing great thank you for having me good this is such a hot topic that i wanted to get you in because i think that um you know there are people that are really experts in this field and there are the rest of us that are just hoping that you can guide us through this process but businesses have started getting these idle loans or eidl loans and can you just talk to us kind of what are some of the major issues that you're seeing with these loans right now well both the idle loan and the ppp loan our government programs while well-intentioned are some of the most screwed up initiatives i've ever seen in my 30 years of practice the rules seem to change every few days and it's really difficult to get answers the programs however are what allows a lot of businesses to still be open and still pay their employees overall a good thing it just takes some work to navigate it now the idle loan the economic injury disaster loan that started out initially as a 2 million borrowing that businesses could tap into at 2.75 percent then all of a sudden they changed it to 3.75 and then all of a sudden it went away well it got reborn at the end of april and it got reborn with a forgivable amount up to ten thousand dollars and that's what people are seeing today they're starting to get deposits into their business accounts of anywhere between one thousand and ten thousand dollars basically you get a thousand dollars per employee that you have five person firm our company would get five thousand dollars anybody with ten people or more ten thousand dollars totally forgivable or so they say we'll talk about that later um then the sba just now is sending out emails that invite people to apply for the rest of the loan that's out there however they went from 2 million down to 150 000 as the maximum now the government unofficially has done that so it's not well publicized but the most you can get is 150 000 at 3.75 for 30 years if you really want to pay it off over 30 years kind of like a small house mortgage right the idle loan then it's an easy process to apply they send you an email you answer a few questions after the process you loan takes about two three days the money shows up the very next day in your account boom you've got up to 150 000 loan that's available again these emails are still coming out from the sba they really just started last week so if people who applied for this sba idle loan back two months ago it's just now happening but this is not the forgivable poor i mean this is this is a different loan so this was a lot of people um kind of applied for this loan and there was an initial thousand dollars that was automatically deposited or per a thousand dollars per employee not if you were a uh sole proprietor or something like that but if you had actual w-2 wage employees um you would count it's sole proprietors would count as being able to get a thousand dollars out of it you know okay clients many clients get that initial thousand dollars and that's the portion that's potentially forgivable but you still have to do something for it or is it just automatically you get it and you just forget about it uh basically you get it and forget about it however where it comes back to haunt you is they now change the requirements of the ppp loan which came out as part of the cares act paycheck protection program if you get the 10 000 or whatever amount it is with the idle loan you now have to to reduce your ppp loan by that amount and thus pay back that up to ten thousand dollars to the bank that gave you the ppp loan hence not really forgivable okay and of course this is not well publicized there's gonna be a lot of people who got the ppp loan that are gonna get surprises at the end of their eight weeks when the banks are saying hey you're off by ten thousand dollars you need to pay us back an extra ten thousand dollars yeah and i think that that's you know i think that that's what people are concerned about right now um you know people are talking about what can you spend you know so there's a lot of talk about spending requirements with the ppp loan you know so what are some of the key factors of what you can i guess use it for what you cannot use it for how it's forgiven all of those good things so one of the initial thing of the key factors with the ppp loan um are that self-employed people as well as partners and partnerships kind of use that term interchangeably now they have now lost the ability to count their own health care costs as a so-called payroll cost so that went away that can be very impactful to the self-employed individuals that counted on being able to use their own health care costs towards the forgiveness part of the ppp loan also self-employed individuals are now limited on how much they can take back out of the loan that they get they have now said that they are limited based on their 2019 profit and they can get basically 850 seconds of their 2019 profit as their share of the compensation in other words eight weeks out of 52 weeks if you do that math you can get that much based on your 2019 profit as your compensation the rest has to be the other factors of retirement employee health care costs and employee wages those all factor in just fine but they really are limiting self-employed people through this and the yeah the next piece of this is we all know about the 75 25 you have to spend 75 percent on payroll costs 25 on rent mortgage interest and utilities be careful there's a rumor out there that you could write off other loan interest but you cannot it is the forgivable forgivable part is limited to mortgage interest so those are a lot of the most recent highlights about the spending requirements that are being talked about really in the last couple weeks as some of this new information came out so one question that i have that is a little bit off of what have you you've said is you know we have a lot of businesses that will have buildings in a separate entity and so they're kind of renting from themselves inside in some capacity does that affect is it rent regardless to what entity you're paying or what if you're paying it kind of to your own entity that you own the property and you own the business does that make any difference or we're just kind of have to figure it out when we get there well that's a really good question i have from day one expected them to limit self rentals and not allow it they have said nothing about it so as long as the rental agreement existed on february 15 of 2020 as long as you have a written lease agreement and you simply follow along through that lease agreement you're fine okay i think that's helpful for a lot of business owners um so it is actually about that time now that many businesses need to start applying for the forgiveness so they got the loan but now they have the forgiveness part of the ppp loans how do they go about this process well up until last weekend we had no idea as of last weekend the sba came out with a 11-page forgiveness application form it is packed with answers guidance and confusion it seems that this app this completed application once you get through your eight weeks is turned into your bank if you can navigate the basic requirements of the forgiveness sba is telling the banks that you're just going to forgive the loan and be done with it as long as your loan is under 2 million dollars if your ppp loan is 2 million or more you're pretty much guaranteed that you have to go through an audit process and they're going to look at all of your underlying documents in detail so that two million dollars is key now most of these loans were well under 2 million dollars so for your average business that's out there gather your basic information give it to your bank and you should be done whatever amounts forgiven is forgiven whatever amount needs paid back is paid back based on the criteria now how deep some of the banks will go in looking at this is unknown when the ppp loans first came out some banks understood that they're supposed to just basically look at the basic criteria and grant the loans they're not supposed to go into all the detail they typically typically do with a business loan but some banks couldn't get past themselves and what they typically do and try to overreach and try to overthink if the banks have learned their lesson with that and they understand now it's really not supposed to be that complicated it should be an easy process but different banks will have different perceptions on that so from from one standpoint if i'm a business owner and i receive the ppp loan should i start doing the paperwork right now should i wait because i think every day or every week new information is coming out should i start the process and then wait and supply it to the bank later or are you seeing people just want to get it done now you know the banks don't want it because they don't have all the answers yet until after your eight weeks is up anyway um also there's some merit in waiting until about the end of week seven before you start analyzing what your position is nothing stops you from paying bonuses to your employees to use up part of the money so let's say you've got an extra ten thousand dollars at the end of week seven that you realize is probably gonna have to be paid back because you just can't work it out and under all the formulas and such to actually use it well consider this do you really want to give it to the government or do you want to do what was intended with the money and put it in the hands of employees so they spend it and help spur the economy well our advice to most people is get bonuses to your employees well why give it back to the government when you can benefit your employees and actually fulfill the intent of the ppp program there's nothing wrong with that so weeks the end of week seven beginning of week eight is when you make those determinations which is why we're telling clients don't sweat the first seven weeks too much but get really busy that last week find out what position you're in do the math do the calculations and make some decisions before uh week 8 is over i think what's overwhelming to some business owners is that you know a lot of them are really bright about their business they're really they know their industry and everything and then we have this small 11-page document that they need to fill out in some respects and so i have been urging people that if they didn't have an accountant that they were working with that they really need to reach out to somebody just as like a sanity check i mean is it is it that easy that a business owner could figure it out or should they just at least kind of talk to somebody and make sure that they're doing it right or is there any detriment to just filing however they did it you know and providing it to the bank because you're kind of saying that it's going to be forgiven regardless but i know business owners want to be precise and they want to be to do it right um you know so are you seeing more business owners deal with like a professional can they talk to their bank about helping with them or do they really need to talk to an accountant it is incredibly varied um it from what we've seen with everyone we've worked with and talking to multiple banks throughout this whole process i would say about 50 percent of the businesses that have applied for this think they understand and have a handle on it the truth is probably less than five percent really do understand it and have a handle on it as we dig deeper with those people who think they know what they're talking about they often don't having said that a lot of accountants aren't even going down this road they simply will provide documents but they are not even beginning to try to be the experts on it most banks we've talked to are steering clear of giving any advice or guidance yet there's a handful of banks that are doing that so i think which accountants which banks which websites which webinars that you access is very key to figuring out what's going on and unfortunately i don't know that there is just one source that gives you every single answer and strategy so i definitely think talking to a good advisor that knows what they're doing is step one but then just talk to your friends talk to your colleagues talk to others talk to your bankers um just take it all in don't get overwhelmed by it but every little bit of information with the rapidness that all this has come out is helpful and you have eight weeks from the time that the money gets deposited in your account or is it from the time that you apply it is from the day it's funded which is defined as when it hits your bank account okay now be very careful with that because many uh clients have thought well i got my money on a monday so then my last day is a monday that's not true your last day is a sunday which is the end of the eight week period one day can make a whole lot of difference between forgiveness or not so some people are paying thinking of paying rent utilities even a payroll on that very last day that last day maybe one day too late if you miscount oh i think that's that's a good that's a good nuance to be mindful of because you don't know you know if payroll comes on a certain day you just might have to make some exceptions and pay things sooner or you are later yep okay another thing another question that um i think people get a little bit interested in is there were full-time equivalents are kind of a an aspect of the ppp loan forgiveness program but how do you figure out and what is you know fte is is full-time equivalent but how important is this to the forgiveness of the loan it is hugely important it's even more important than the 75 25 split of how you use the money unfortunately this has been downplayed um and a lot of people you have a shock when they get to the end and realize they didn't comply quick example let's say you have 10 employees at the first part of this year i'll call that the base period now during your eight weeks you drop to nine employees you have a 10 reduction right 10 of your ppp loan gets paid back even if you meet the 75 25 criteria so ftes huge huge issue you lose two of your 10 employees now 20 of your money is being paid back and yet you may have already spent the money giving bonuses paying rent you have no cash but you have to pay back 20 percent of your money so ftes very very important full-time equivalent what you know tell me a little bit more ab what about part you know if you have two part-time people is that one full-time person well they've defined it two different ways for us in the 11-page document we talked about earlier the forgiveness application that just came out a week ago they finally defined full-time equivalents as 40 hours in a week so that equals one fte you can't be above a one so if you work 45 hours in a week or employee does they're still a one however somebody who works 20 hours in a week is a 0.5 somebody who works 10 hours is a 0.25 so they have defined that you should get down to a 10th of a full-time equivalent is the default formula based on the number of hours they work you have an alternate choice however that you can count anyone that is not a full-time fte simply as a half-time fte so somebody that works two hours a week or somebody that works 38 hours a week could under the default or the secondary formula be a half fte our advice to clients is you run the calculations both ways use whichever formula works out to your best interests and both are acceptable that you know i think i have like 800 more questions about that because that seems a little bit more complex than i could even go into so i think we could talk about a hundred different scenarios and i think that that's the real thing is these business owners have nuances in their scenario that they really need to reach out to somebody who is living eating sleeping breathing these loan forgiveness ecause things are changing so quickly you know things are changing a new pronouncement new uh indication of what you should do comes out every day or every other day but what do you see next for businesses like what should they be doing how are we going to get through this you know in general i mean it seems like the ppp and the idle loans were really good programs and i think they helped a lot but what next for businesses so i think a few things come to my mind with that question one is what's been downplayed and missed a lot is that state county and local governments are coming up with all kinds of grants and loans as well now what i've seen these are a little more complicated applications but especially if you're in a point of need go after the money because most of it has not been tapped everyone has just been relying on the ppp and the idle loans and not tapping these other sources of grants and loans so check with your state county and local governments the other thing i think we all wish that this is all just going to go away all of a sudden shelter in place goes away and then everything is right back to normal probably not fundamentally it's going to take a while to get people back out and be comfortable interacting fundamentally we are going to find that the economy probably is going to stutter for six to 12 months at least which could spell the end of many businesses i think as well we have changed a lot of business models and how we spend money and what we do with our time that's going to change how consumers spend money so i think there's a lot of unknowns and i think things have changed for the future and we don't fully realize that as well right now consumers have built up an unprecedented amount of cash and savings because they're not eating out they're not traveling and they're not shopping as much likely when things open up there's going to be a flood of cash coming into the economy however be careful i really think that that influx is gonna be short-lived um plan that the economy will take six to 24 months to recover and you'll be much safer than trusting that everything will return immediately so as any business owner knows you've got to plan and for so many businesses planning really wasn't a part of what they do they simply had to exist expand and do what they do well i don't think that's true going forward right now at least in the short term plan for your worst scenario if you get better than that great but if you plan for the best scenario you may find that you're out of business so planning is everything yeah i agree i mean i i've talked to a lot of business owners and i think that a lot of you know and we've been talking about values and valuations and how they've changed but i think right now it's it's hard to project when this is going to end if there even could be an end date um it's going to be a gradual going back you know trying to get your revenues back to where they were or your profitability maybe your revenues stay but your profitability has an issue but it's really about trying to figure out how you can do your own business different either more efficient or um you know start something new and do things completely different because those are the companies that i'm seeing that are having a better time getting over this and and getting through it right it's the ones that are just like well i do business a certain way and i'm just going to wait for it all back to open up i think those are the ones that are going to have a much harder time and so it's the creativity it's the working and figuring out a need that maybe wasn't there and how can you fulfill it is going to be important a lot of the businesses we see failing are low margin businesses they were struggling before you know the restaurant industry typically doesn't make high margins and so you have them struggling if things change and the restaurants are kind of most of america you know a lot of us live paycheck to paycheck and as long as that keeps coming we're all good but if something happens we're not prepared and it really puts us into a tailspin um so i think that this was all really good information and what we need to let our listeners know is that reaching out to just any accountants may not be the answer reaching out to even your current accountant things are changing so quickly that you really have to be an ex you know like you really have to be an expert in this but be willing to consume the changes quickly so that you can then regurgitate that to the clients right i mean it can't be i watch a webinar and now i'm an expert right i mean it's because things are changing rapidly and when i read some of this stuff it is hard to understand from my perspective and i live in this space so um any last parting things that you have for business owners uh suggestions of how they can get through or anything helpful you know you summed it up well melissa you really talked about that entrepreneurial spirit you know business owners need to tap into what they had when they started their business that ingenuity um remind themselves what it was when they first started out and that they will likely be fine um you know find that even if you've been doing something for 30 years remember what is it like to start something new and you're probably going to be a whole lot more successful coming out of this yeah and i i completely agree i also think it keeps you a little bit more mentally stained if you're busy for me and so if you're busy you know you can be busy servicing clients you can be busy doing projects but if those dry up then you need to get busy either learning something new or coming up with something different like what is the world going to look like in six months 12 months 18 months none of us can really predict it but in our industry we might be able to come up with something that could be different enough or unique enough that could help us kind of levitate above having no projects and i think that's where people and and it does take a lot of brain work to come up with new ideas and new products or services but that will also keep your mind busy so that you focus on going forward as opposed to focusing on you know the past that is is basically we have to leave behind at this point like we don't have that choice so um well this was awesome thank you mark and uh please we're gonna have you back to talk about all sorts of other things but we appreciate it and we will post all the different ways that they can contact you because you actually are doing significant amount of work in this space right and so yeah and and i keep on telling most of my clients at this point during this crisis is the best time to reach out to professionals like us because we will take the calls we will talk to you you know you could get some maybe advice that you would have to pay for in the past but maybe they just have some questions and you're a good resource right yeah that's exactly right contact the val contact your professionals in your circle that can help you the most just realize not everyone's the same make sure it's an area that they really do well in okay we appreciate it thanks so much mark thanks for having me melissa have a good day