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good day ladies and gentlemen and welcome to today's liberty bank webinar updates on obtaining loan forgiveness and new ppp loans now it's my pleasure to hand today's session over to the first of our speakers don peretto a senior vice president with liberty bank don over to you thank you matthew good morning everyone uh welcome to the latest installment of the liberty bank ppp webinar program first i'd like to take a moment thank matthew line for hosting this webinar believe me when i say it wouldn't be nearly the same uh experience if they allowed me to do it so thank you very much matthew also i'll be introducing tim reimink and virginia deeg from crow llc i want to thank them both for taking the time to hold this webinar lastly um just i'd like to thank all of you for joining us this morning you know liberty bank takes its responsibility to be there for its customers very seriously and we thank you very much for entrusting us i know this is crazy and difficult times and we really appreciate that you entrust liberty bank to be there for you as you can see uh we did ppp uh what we call round one and two um at this point we've done almost 3 600 loans 3 400 businesses 310 million dollars this put liberty among the top connecticut bank connecticut based banks in terms of the ppp program as we did last time we're going to do the same system this time this will be an online platform that will facilitate and streamline the application process so everything that you do will be done once again through the abrigo system if you're a returning customer and you will log in through your existing credentials if you are a new customer you'll simply register for the portal and again we will be communicating as often as we possibly can because the sba does like to change the rules as they go things are often updated and we want to make sure that you have the most up-to-date information and as you can see on the screen we've we've heard from you guys we really appreciate the kind words and we will do our best to give you a top level of service again as we head into the crazy world of ppp3 with that i'm going to turn it over to tim reimeck of crowe llp who is going to guide us along this journey thank you thank you don uh thanks everyone for joining us uh we are looking forward to sharing information with you on a variety of topics we're going to cover the uh the new legislation and in particular the loan programs and forgiveness changes that were were made also going to spend a little time uh giving you some tips on how to make uh the forgiveness process work uh more smoothly and quickly for you and then also uh talk about the fact that some borrowers will be audited by the sba and give you some insight into that and then we'll have time at the end to answer questions so please enter questions in the q a portion of the web the webinar and we'll uh review those and answer as many as we can at the end of this presentation uh before i get into the uh the topics i do need to provide a disclaimer uh you know we're dealing with a situation where the information is not complete the sba continues to issue guidance and there's some things that we're waiting for right now so we're sharing information but it is subject to change also want to point out that we're providing uh information we hope will be helpful but we recommend that you actually work with your own advisors tax legal other advisors as it relates to specific questions about applying for a new ppp loan or handling forgiveness of your ppp loans crow really can't assume any obligation to be an advisor to you through this process with that disclaimer let's talk about some of the changes that are occurring with the paycheck protection program the new legislation put almost 285 billion dollars of new funding out there for small businesses around the country and the sba issued their uh regulations around that a week ago and we are still waiting uh for a new application form for forgiveness which hopefully will be out next week but we have do already have the application forms for the the new loan programs those were issued uh last and the last week so one of the interesting things about the new legislation is that all the changes uh made to the program were retroactive back to uh the loans that were uh originated last year in 2020 so some of this will be a change for those of you who have existing loans that you're waiting to uh to receive forgiveness on so let's uh go into three different areas one we're going to talk about the first what they call the first draw ppp loans these are loans for those businesses that did not receive a ppp loan in 2020 but now are you're eligible for another uh first draw loan uh they also have uh second draw loans uh these are loans uh that we can do in uh this year uh if you meet certain requirements it's for those uh businesses that that had a ppp loan uh provided last year and then uh we'll also talk about a simplified uh process for forgiveness of loans under uh of a hundred fifty thousand dollars or less some good news there for for everyone i think so let's talk about the first draw ppp loans eligibility requirements are fairly similar to what the program was last year if you employ five no more than 500 employees there are some exceptions to that rule if you meet certain sba size standards for your industry you need to have been in operation a business operation as of february 15 2020 and uh you did not receive a loan last a ppp loan last year so those are the the base the key aspects of eligibility for a first draw alone uh the calculation of how much of a ppp loan you can receive is essentially the same as last year as well it is two and a half months of average monthly eligible payroll costs basically looking at your 2019 payroll cost or the la the most recent 12 months there are some new provisions for seasonal employers they can use any 12-week period from 2019 to calculate their average monthly payroll costs but it's two and a half months worth of that uh the the cap on this program is the same as it was last year 10 million dollars is the largest first draw ppp loan which can be made and if you're part of a corporate group that has multiple companies getting ppp loans the aggregate for that group can't be more than 20 million there is also a a provision for uh which i don't think will be a very common that if a borrower did not accept or use the ppp loan funds that were approved for them last year they do have an ability to to have them re-advanced or dispersed the application form that you would use for this first draw loan is pretty similar to what you saw last year just some additional information that the sba is asking for on the form but there are a variety of certifications that you'll need to make as part of this application around the need for the funds that you're complying with all the rules of the ppp program uh that you're willing to to provide documentation of requests and some other certifications now i encourage you if you're interested in this loan program to to get the application it's available on the sba website read through the instructions read through the details it will be very useful helpful for you to do that at some point in the not too distant future the bank will be opening up its portal for receiving applications and that portal is uh configured to uh to take all the information you won't need to fill out a a paper form you'll just enter your information into the portal itself but i do suggest that you get a copy of the application and read through it another aspect of the the program is the uh the legislation did make some uh types of uh organizations eligible for a ppp loan that weren't before uh housing cooperatives with up to 300 employees chambers of commerce business leagues real estate boards all the 501 c 6 type organizations certain tribal concerns as well as newspaper and broadcasting organizations uh here's some additional information on the entities that are eligible i'm not going to read through this in detail but i'm putting this into the presentation for reference i would encourage you to download a copy of this presentation to use as a reference as you get into the different loan programs so let's talk about the the second draw loan program which we really think is going to be the most of the activity is going to be in this program uh those of you who received a loan last year coming back for a second the eligibility requirements for this program are a little different than they were last year you the limit on employees is 300 employees no more than 300 employees you also need to demonstrate and this is really the the significant change to the eligibility you will need to demonstrate uh that you had a 25 reduction in gross receipts or revenues in one of the quarters in 2020 compared to 2019 the same quarter in 2019 and that we'll i'll talk a little bit more about what that involves but that is the the most the more significant eligibility criteria now one of the things to point out here is in it isn't for the full year of 2020 compared to 2019 it is really uh that you had a 25 reduction in any one particular quarter says the second quarter or the third quarter of 2020 compared to 2019 other eligibility as you might expect is that you've used up all of your ppp loan funds from the first loan that you received before the second draw loan can be dispersed you'll need to certify that you've used all the original funds interestingly enough you don't need to have your first ppp loan forgiven that could still be out it just seemed it just means that you need to certify that you've used all the funds for eligible purposes like the first program you need to have been in business operation as of february 15 2020 uh and uh by the way the the last day to receive approval from the sba for this uh program is march 31st of this year the same for the first draw program the calculation of the loan amount is very similar to the the original ppp loan program and the first draw program it's two and a half months of uh average monthly payroll for 2019 or the prior 12 months uh interestingly enough they did make a change for those businesses that are would fall under the next coach 72 which is lodging and restaurants their maximum loan amount uh can be three and a half months of average monthly payroll as opposed to two and a half months now the limit on the the size of a loan is uh much lower than the uh first draw program uh second draw loans are limited to no more than two million dollars or four million dollars in total if you're part of a corporate group with multiple loans so a little bit more restriction on the second draw alone than the first draw but still i think a lot of businesses will will be able to qualify for this second draw ppp loan and the legislation did however put in some ineligible categories uh certain types of businesses are are ineligible for getting a second draw basically if you already have a second draw alone you can't get a another one so that you can only get one if you're a publicly traded on a national exchange you can't come back in for a second draw and then they have a variety of considerations around people's republic of china if your business was organized in china you have significant operations in china or if a chinese resident is a member of your board uh you're ineligible for a second draw ppp loan they've also put restrictions around lobbying entities or businesses that are involved in lobbying so if you're a lobbying organization or a think tank you're not eligible for a second draw alone and then this may be unfortunate but if you have permanently closed your business you are ineligible to come back in for a second draw ppp loan it's uh certainly allowable to have had some temporary closures but if essentially you've gone out of business and permanently you can't receive a second draw alone so those are some of the basic features of the second draw program i'd like to talk a little bit more about that gross receipts criteria it's a 25 reduction quarter over quarter from 2019 to 2020 uh gross receipts is a pretty broad category for the most part i think for uh most businesses it will correspond to the revenue line that you have on your financial statements but they have some detailed uh descriptions of what all can be and should be included in what they refer to as gross receipts and putting that this here for for reference uh now let's talk about the documentation required for the the pp the second draw ppp loan um it's a variety of things some of that that you would be expected uh 2019 business tax return banks like to have those in in hand if you're a slow proprietor or non-profit there's versions of that that you provide you'll definitely need to provide a 2019 calendar year payroll cost report because the amount of your loan is basically uh driven off of your average payroll costs in 2019 there is a provision for using the the last 12 months but we think it's easier just to work with 2019 uh chances are you had more payroll costs in 2019 than you did in 2020 so that 2019 number is going to be uh result in a bigger loan amount since it's the loan amount is driven by two and a half months of average payroll costs you'll also need to provide evidence of the other payroll costs that are that you can include you can include employer contributions for health benefits group benefits vision dental disability life etc also that the employer contribution into retirement plans is part of payroll costs so you can add up all of those payroll costs in terms to determine your loan amount uh when it comes to that revenue reduction requirement basically you'll need to provide a quarterly income statement for whatever quarter in 2020 you're going to select as your reference and then this a quarterly income statement for the same quarter in 2019 those can be internally prepared income statements coming off of your whatever accounting system or whatnot that you use as a evidence of the 25 reductions in revenue there's also some additional documentation that you've you also had to provide for the first ppp loan you're going to proof of what type of entity you are a schedule of who the owners are of the business payroll tax filing or quarterly payroll tax filing reports and then i want to point out that there is a limitation on eligible payroll costs uh you'll need to show uh and and not include any uh pay over a hundred thousand dollar annualized rate for any single employee that cannot be part of that payroll cost calculation a few other things around ppp loans as i mentioned earlier the the sba is at this point saying that they will approve loans only through march 31st uh the sba is giving them five days to approve applications so that would say that you probably should make sure that your applications are in at least five days before uh march 31st and you know sooner the better uh another uh change in the program is uh last year's program uh you had a choice of either a covered period of eight weeks or 24 weeks the covered period is important because it is costs that you incur during the covered period that are eligible to support forgiveness of your ppp loan they've modified that and you can choose any covered period in length between 8 and 24 weeks so if you've used up all of the the new loan funds in 12 weeks you can use 12 weeks as your covered period and apply based on that in terms of your certifications around fte and use of funds and things like that so a little bit more clarity around the cover period and some flexibility as i mentioned earlier in certain situations some borrowers may be able to advance unused portions of a previously approved loan and then they did put in a whole section around farmers basically saying that someone having a schedule f as their tax return for their their business can now use that for their ppp loan the application process is going to be similar to what you've experienced before if you did go through the process before you'll access through the liberty bank website their their ppp portal if you're an existing borrower you'll be able to use your existing credentials if you're new you'll establish new credentials you'll complete the application information that is required you'll u load the required documents uh you'll submit that that to the bank for review the bank needs to review the application to confirm uh that it's complete to confirm that the documentation uh supports the the dollar amounts that you put into the application for for payroll costs and hence the loan amount and some of the other information that's being requested at that point if everything looks good the bank will submit that to the sba if something is missing uh you know the person from the bank will reach back out to you and and let you know what might be missing and request that you go back in and either upload documents or or provide information but once it's complete excuse me we'll be submitting it to the sba as i mentioned the sba has one to five days to approve uh once it's approved you'll be uh signing loan documents electronically through docusign and then the the funding of the loan will be deposited into uh your liberty bank account so that's the the general process that you'll go through in terms of timeline uh this just is a schematics to to show how the you'll handle these loans you'll you'll submit your application you'll have the bank approval the covered period will run from 8 to 24 weeks after your date of disbursement at some point after that you'll uh submit a request for forgiveness the bank has 60 days to to make a decision on forgiveness ultimately the sba has 90 days to make their decision on on the forgiveness amount and ultimately that your loan would amount will be forgiven if there happens to be any remaining balance that would get amortized if for some reason you don't uh request forgiveness payments will start on your your loan ten months after the end of what would have been your covered period that a little bit of information on the timeline there let's talk about the forgiveness part of this the changes that are took place in the legislation uh they've added additional cost categories that can be used as eligible costs to support forgiveness of your ppp loan uh i'll give a little bit more information on the next slide around these but costs associated with uh software that supports your operations costs that you may have incurred because of damage to property associated with public disturbances that occurred last year costs to suppliers for the purchase of goods that were under contract and and paid for during the covered period and then costs that you may have incurred to protect your workers from the pandemic that that includes things like personal protective equipment but also would include the construction of barriers or drive up windows or whatnot to to help with social distancing another uh so the calculation of your forgiveness amount is essentially the same as under the existing program uh you'll need to uh accumulate eligible costs during the covered period uh dem uh provide evidence of those costs and then uh that is the deterministic amount of forgiveness one of the criteria is the same as last year is that at least sixty percent of your payroll your forgiveness amount needs to be supported by uh payroll costs in many instances it might be a hundred percent but at least sixty percent there also continue to be uh reductions under certain circumstances uh uh based on your uh reducing fte or degree decreasing the pay rates of certain employees below uh by more than 25 percent so but in essence uh the forgiveness calculation is the same uh as it has been under the original program the uh simplified process is the big news for the new legislation uh the congress has made it uh very straightforward for anyone who has a ppp loan of 150 000 or less there is a one-page certification that will be required that form has not been issued by the sba yet so we don't know exactly what it's going to look like or what it's going to contain but the legislation does stipulate what what's involved there's no document no requirement to submit any documentation to support the forgiveness request at the time that you request it you do however need to retain documents for at least three years and if they're employee related four years because uh should be noted that your loan is subject to sba audit we know that the sba is already conducting random audits of of ppp loans any loan over two million dollars the sba said they will audit it so that's a that's a given but they are conducting random audits under that amount so even though you may be submitting only a one-page certification there is the possibility uh that you'll be asked to provide all your documentation uh to support uh the forgiveness if the sba chooses to audit your loan let's talk a little bit more about these changes here's some description around the the cost categories have been added i provide this here for reference for you if you pull down a copy of this presentation and also uh they did provide some clarifications uh one they they did clarify that in fact all group uh benefit programs for things like uh life disability vision and dental are in fact part of benefit costs that can be included in payroll costs people had i think generally assumed that to be the case but the legislation made and the sba guidance has made it clear now they also provided some clarifications around how to prorate employee compensation because under the program last year and this year payroll costs uh cannot include uh anything that you paid a particular employee in excess of a hundred thousand dollar annualized rate and so they provided some clarity around uh how to prorate salary of that cap for the period of time that it's been that you're considering and then the other clarification which is i think is definitely helpful is they did specifically define what they considered to be a seasonal employer a seasonal employer is someone who's operates no more than seven months in the year or they receive at least 75 percent of their revenue in in a six-month period of time in terms of the simplified process let me dive into that a little bit more detail here uh there are the legislation uh calls for uh a certified a one-page certification no more than one page uh and three pieces of information uh on that uh certification uh the number of employees that the borrower is going to be able to retain because of this loan uh that the estimated dollar amount of payroll costs and that that would be covered by this loan and then the total loan amount so those are the three pieces of information how many people did you retain what were your payroll costs and what is the loan amount that you're requesting forgiveness there are however a variety of certifications expected we don't know what this form looks like yet it should be out by the end of next week um but there are the law does require a variety of certifications what which i would expect are going to look rather similar to the certifications that are part of the existing forgiveness application you are we as i mentioned you're going to be required to retain all of your documentation and records to support uh the amount of forgiveness that you are requesting because audits are possible when you look at the the process for forgiveness for loans under a hunt over 150 000 it really isn't changed the the the legislation doesn't really speak to any changes for uh above 150 000 uh you'll be still going into the forgiveness portal using a secure id you'll be uploading and submitting information documents about your eligible costs you'll be checking the box for the certifications that you're making uh the bank will uh still re required to verify aspects of your application and confirm amounts the bank will make a decision as to uh whether the application your application is approved for the amount that you're requesting and then you know send that off to the sba they'll make a final disposition they'll send the forgiveness funds to the banks who apply to your loan and then if there happens to be a remaining balance that will be amortized when you look at the under 150 000 it's definitely uh changed and streamlined you'll still go into the portal to submit the application in the portal you'll complete the one-page certification uh that will be submitted to the bank we'll confirm at the bank that the all you've checked all the necessary boxes in the certification and then we forward it to the sba or excuse me we have you e-sign uh the application we submit it to the sva and then the sga determines their final just disposition on it and send the forgiveness funds to apply towards your loan a few other things that i want to bring to your attention one of the nuisances about the existing process has been uh idle advances advances that some borrowers received on an economic injury disaster loan those idle loans are ones that were made directly from the sba to the borrower and there was the requirement to uh to deduct any uh forgivable advances up to ten thousand dollars that were made on those loans from the amount of your forgiveness of your ppp loan all of that's been wiped away by the the congress uh and if um so those deductions need don't need to take place anymore and if by chance uh you did receive forgiveness already and that of idle advance was deducted the sba is responsible for making it whole and getting that paid off so you won't have that residual balance on a loan at the bank because of that idle advance good news in that regard for those that had a an idle advance well one thing i'd like to uh spend a little just a little bit of time on is uh giving you some tips around how to make a requesting forgiveness uh quicker and easier a couple of things in that regard one find a way to get the a longer extended or a longer covered period the more time you have the more time you have in a covered period the more time you have to accumulate costs to support your forgiveness uh we also suggest that you limit the number of cost categories that you work with uh less documentation would and would be required if you're over 150 000 if you have fewer cost categories in fact uh we we see many borrowers achieving full forgiveness of their loan just using the amount of payroll or money employee compensation costs that they had during the covered period uh instead in fact extending your covered period for a longer period would make that easier and and then if but if that isn't the case we suggest you choose the simplest cost categories to evidence typically that's been employer benefit employee benefits owner compensation and non-payroll costs tend to be the ones that require a little bit more documentation than those first two categories so those are some suggestions for making it easier for you to submit forgiveness if you're over 150 thousand dollars couple of other uh suggestions to make the process go faster if you're you're over the 150 000 is uh provide the bank with a summary of uh each cost category so they can quickly see you know how what the total is and how that corresponds to the uh the invoices or whatnot that you're providing or payroll information uh if you do need to provide bank statements to evidence the payment of costs a highlight on the bank statements the particular uh item the particular transaction so it's easy and quick for the reviewer to find please uh keep in mind that you do need to provide evidence of how much cost was incurred such as an invoice but also that that that was paid during the covered period so a bank statement or a receipt or something like that and then the other piece that is oftentimes forgotten and want to remind you is you do need to provide evidence that that those services were in existence ever as of february 15 so utility utility bills from january or rent payments invoices from prior to the 15th of february are ways that you can you can evidence that copies of leases etc so but a reminder this is oftentimes uh forgotten uh and need and we have to go back and ask for it as as evidence that you were those were in existence as of the 15th so those are some tips to make the forgiveness process go a little bit smoother and quicker for you if you have a loan over 150 000 if you have like most borrowers have a loan under 150 000 uh once that new uh one page certification form comes out we'll the bank will uh announce that that's available and you'll be able to go into the portal and and do that in fact for some of you that have already submitted a request for forgiveness you may want to replace that request with the new one-page certification uh just to not have to do any more work around a forgiveness request in fact the bank has been kind of putting on pause for the last week or so those smaller requests figuring that once the new form comes out the that you as the borrower will just prefer to just sign that certification and not have to do anything more uh let's do a little hypothetical example here of how uh you can have the most minimal effort in in uh covering forgiveness if your loan's over 150 000. uh example is a a business with 15 employees making 52 000 a year two owners using a 16-week covered period have some benefit costs in addition to the payroll and their uh ppp loan was 204 thousand dollars roughly uh in this instance uh the calculation of forgiveness if you just look at employee costs and compensation each employee's making a thousand per week uh 15 employees over 16 weeks would have 2 240 000 of of uh of pay that's more than the loan amount of 204 so we're good this forgiveness request is is supported by eligible costs and then you need to support that with documentation a summary of the payroll evidence of payment of the payroll either bank statements or a third-party payroll provider report and then your payroll tax forms for the quarters and if uh you use the easy form uh for the and the second criteria around not reducing fte you'll need to show how many fte you had at the be in your covered period as well as in the reference period um as a comparison so a relatively small number of documents to provide and all of the forgiveness is covered by the one cost the employee compensation all right a few other legislative changes that i want to bring to your attention are not specifically related to the ppp program they did extend the the idle program the economic industry disaster loans which is a sba direct program that was extended uh to the end of uh descent this year good news for those of you who can take advantage of that they did bring out a whole new uh program of grants to what they called shuttered venue operation operators the theaters museums live venue sites they need to show up 25 reduction in revenue like the others uh those grants these are not loans these are grants will be phased in over a few weeks period of time here and then the money can be used for payroll rent utilities personal protective equipment costs and the the sba will be monitoring those uh if you take advantage of this grant program you won't you are not eligible to receive a ppp loan uh so but what looks like an attractive program for those particular shuttered venue operators as they call them uh there are some uh definite some changes to the tax implications that would apply to anyone that have a has a ppp loan either this year's or last uh last year's uh like we've known the forgiveness of a ppp loan is not considered to be taxable income that's not really a change the big change uh is that any expenses that you cover using the ppp loan are now tax deductible the guidance from the irs last year was uh that expenses paid for by the ppp loan uh could not be deducted now they can so that's a definitely a big benefit for businesses from a from a tax perspective they uh also allowed recipients of ppp loans to uh qualify for certain tax credits that that wasn't the case before they've extended uh the ability to defer the payment of payroll taxes uh until the end of the year and they also uh changed or reduced the amount of reporting requirements if you have a ppp loan as it relates to its impact on income so some good changes from a tax perspective the big one being you can now deduct the expenses we've already talked a little bit about fba audits i want to bring that back up unfortunately again not everyone's going to be audited but we we do know that the sba is doing random audits if by chance uh you res um your loan s selected to be audited uh and and as a reminder every loan over two million dollars will be audited um if you are selected uh the the bank ends up acting as kind of the conduit middle person between you and the sba uh the bank will actually receive the notice that your loan is is going to be audited reviewed the bank has five days to inform you of that audit request you then only have 10 business days to gather up all the documentation that the sba is requesting and the other information and get that back to the bank uh the bank then has five days to upload all of that documentation and other information to the sba to for them to use in in their audit how long the sba is going to take to conduct an audit don't know the other thing to note is that the law is requiring that you retain documentation for a three to four year period of time um if you have a um a second draw a loan and so that would uh say that the sba could come back you know two three years from now and asked to have uh your loan uh audited uh so again reta retain what you have just in case uh again this is a random audit don't know what percentage of of sba loans will be audited at this point if you do receive an audit the the types of documentation that you're going to be asked to provide that you should be retaining as is all the documentation that supports the the eligible costs that you use to justify your forgiveness amount uh they know the payroll the utilities whatever else it might have been uh you'll also be asked to provide some documentation to support the the fact that you needed the loan in the first place and you'll also be asked to provide documentation to support the accuracy of the certifications that you made as part of your application for forgiveness and for the loan here's a little bit more of information for reference around what those things might be in terms of the types of documentation to support your costs one other thing to point out here is that there may be documentation that's required for you to submit at the time you asked for forgiveness or when you applied for the loan but there's also the expectation that you also you have other documentation that you used to calculate your forgiveness amount and support it that you weren't required to provide at the time you requested or submitted your application uh the the borrower the sba is going to ask for all of that both the documentation you provided which they already have and and also all the documentation that you would have had in your own files that you didn't provide at the time here's a little bit more information on the necessity of documentation that might support the necessity of your loan and also if you use certain certifications as part of your applications you may have certified that you you didn't reduce any wages of any employees by more than 25 percent uh you'll need to if you use that certification uh you'll need to provide supporting documents for that things like payroll records uh for for each employee if you used a certification that that said you were using certain exceptions that were allowed for fte reduction such as people voluntarily resigning inability to hire qualified employees if you use that certification you'll need to have documentation to support the accuracy of that if you had a certification that said you didn't reduce any fte you'll need to provide the payroll records and other things to support that certification and if you use the certification that said you had been adversely affected by covert 19 orders you'll need to have documentation to support that that may be you know copies of government notices that were published uh what kind of requirements were applicable to your locations uh financial records that showed that those adversely impacted your your business uh so kind of a a reminder it's not this is not gonna apply to the vast majority of borrowers we don't think but a reminder that retaining your documentation is going to be important for all of this just in case you get audited with that i would like to to turn to answering some uh questions we know that we have a few that are probably out there so i'm going to cover a few here and then we'll open it up uh for what you've been submitting as part of the q and a and in the webinar a couple things is owner compensation included in in payroll yes uh owner compensation can be part of payroll costs there are some limits however the basically the the biggest limit is that owner compensation it cannot be more than two and a half months worth of what you made in 2019 as an owner can be included how is a business owner defined for purposes of the owner compensation uh if you have someone who owns five percent or more of the business uh they fall under that owner category as far as the ppp program is concerned for forgiveness we've had some questions of if you own a franchise how does the 10 million dollar cap and the 20 million dollar cap on affiliated groups apply to you the each franchisee entity is considered separate so each franchisee could have for the full limit you don't need to aggregate across the multiple franchisees when it comes to the second draw alone yeah here's a question if you received uh your forgiveness uh amount in last year how does that impact your gross receipts calculation for purposes of that 25 reduction uh the forgiveness of a pp loan ppp loan is not included as part of any gross receipts or revenue calculation for purposes of that second draw eligibility uh criteria uh if you're now here's an interesting one your your gross receipts in fact decreased by more than 25 percent in the second quarter of 2020 but we're restored by the fourth quarter uh back to uh you know what had been your your historical levels are you still eligible for a second draft ppp loan yes uh the the eligibility is strictly on a quarterly basis so it's comparing one quarter in 2020 either the first quarter the second quarter the third quarter or the fourth quarter to that same quarter in 2019 so yes you could have had a disastrous second quarter but your business rebounded uh but you were are still eligible for a second draw alone because of that one quarter would you be eligible to receive apply for a second draw a loan or a new pp or when will you be eligible sorry i'm not reading that question correctly the loan applications have been provided uh out at this point they just came out and so we're expecting that sometime uh next week uh the bank will be able to open up its portal to accept uh uh are you able to get receive a a new first draw ppp loan and a second draw uh we don't think so uh if you'll either have the opportunity between now and march 31st to apply for a first draw new ppp loan or a second draw you won't be able to get both when will you be able to request forgiveness if your loan's under 150 000 as pointed out they haven't uh issued the application form yet we think that'll be out next week so sometime over the next couple weeks you'll be able to use that streamline process uh if you receive two ppp loans uh you had loan last year and you're all and you take a second draw uh if they in total add up to more than 150 000 uh will that mean that you can't use the uh the new streamline process uh sba guidance hasn't specifically been uh about this but our interpretation right now what we see is that each loan is is treated separately so you would be able to use the streamline process for each loan because each loan is under 150 000 uh with that i would like to open it up for questions that have come through the webinar i think virginia what do you have that might be of interest a lot of questions coming through so we will try to address as many as we can um one of the first ones a recurring question that we received is if my first ppp loan amount was not fully forgiven but i used all of the funds can i still apply for a second ppp loan if the other requirements are met well you are going to you'll be required to certify that you've used all of the ppp loan funds for eligible costs uh in order or that they've all they'll all be used before uh you you receive the disbursement of funds from your second draw loan um a little surprising to me that someone would have would not have their entire ppp loan forgiven if in fact they've used all of the funds for eligible costs so that might imply to me that uh if you didn't get the entire loan forgiven it it's because you didn't and and you so that you may imply that you didn't you can't certify uh to the second draw loan if however the reason you didn't get all of your loan forgiven was because of an idle advance that's going to get wiped away and so that would uh you know eliminate that that situation and you would have been using all your costs all right next one jim yeah next question another reoccurring one so when liberty bank is ready to accept applications for this next round of ppp funding how will applicants access the form to apply uh you'll access that through the online ppp forgiveness portal that's being used by the bank uh so you'll you'll go in establish credentials and and submit your information uh and check the boxes on certifications through that online portal that online portal can be reached from the liberty bank website and as some of you may already be in that portal you can go back in and resubmit your application using the new form once it's available all right our next question um from susie are workers compensation premiums included in eligible payroll costs when calculating the um loan amount the eligible loan amount uh yep tax state state local taxes on payroll of employees can be included as part of uh payroll costs that would include on unemployment insurance workers comp so i think yes all right and um going off that um is owner draw also included in eligible payroll costs uh yes owner compensation can be included up to the limits um of two and a half months of their 2019 income or an annualized rate of 100 000 whichever is less all right um next question about sba audits um will loans be audited if um together with affiliates the business in total received ppp funds of 2 million or more all right i'm glad they asked the question yes actually the if you have a loan itself over 2 million or if you and your affiliated group of companies in total have more than 2 million the loans will be audited all right thanks tim another reoccurring question from quite a few individuals is um so borrowers who received loans in 2020 are they also eligible to use the new requirements such as the streamlined forgiveness application or the new cost categories that have been implemented will they be eligible to use those as well yes all of these changes in the legislation were retroactive back to all of the ppp program last year so the new cost categories are are eligible for forgiveness of last year's loans as well as all the other provisions including the streamlined conditions okay yes um next question is related to sole proprietors um and independent contractors so um regarding the new ppp loans how should sole proprietors and independent contractors those without employees or payroll per se how should they calculate their loan amount the loan amount is based on the owner's compensation in 2019 so you'd you'd provide a schedule c uh or um you know k ones or whatnot if you're if it's a llc partnership what not and um and so that's the basis of which of determining how much compensation you had and then you'll take two and a half months of that average monthly compensation all right um next question what documentation will be required to show a 25 reduction in revenue um in order to be eligible for a second draw loan uh yeah the the easiest uh way to do that i i think is for the to print off a quarterly uh financial statement off of whatever accounting or bookkeeping system you use and and provide that so you would if you're going to use they say the second quarter of 2020 as the the the period you would print off a quarterly financial statement for the period april through june for 2020 print the same uh report off your system for 2019 from you know april through june and provide those financial statements to evidence uh the decline in revenues all right and i think we have time for maybe just one more quick question um who should um borrowers and applicants contact if they have ppp related questions uh you there is uh a um an inbox an email inbox you can send questions to at liberty bank uh you can find that information on the delivery bank website um or you could uh reach out to a banker that you know at the bank and uh if they can get you the information or they'll get you someone who can get you the answers to your question and also uh there's a lot of good reference material on the liberty bank website there's copies of faq documents there's recordings of this webinar as well as others and so that can also be a resource to answer your questions with that i'd like to thank everyone for uh participating in our webinar today i hope uh the information that we provided has been helpful uh i'm sure that uh there's more that you'd like to know again i would encourage you to use this presentation as a reference i encourage you to to actually go read the sba application forms and the instructions and seek the advice of your legal and tax advisors if it comes to how you want to specifically apply for loan or forgiveness but again thank you with that matthew anything else you want to wrap up thank you tim i'm actually going to invite don back on the line as well see if he has any final thoughts for folks so don will turn to you and then i'll give a couple of housekeeping items but don anything you want to share with folks before we wrap up uh thank you matthew and tim virginia um great job um tim just add to your answer to the final question i highly strongly recommend please reach out to your cpa your cpa is going to be your best friend in this process they know um the accounting and the sba rules really better than anybody they can help you make sure you're providing the right documentation and they may be able to help you create reports if you don't have one already so i strongly recommend you reach out to your cpa other than that as always a fantastic job a lot of information here this will be available on our website uh either later today or tomorrow and once again i just want to thank everyone for taking the time out of what i know is their busy day to uh attend this webinar thank you very much and don thank you to you for pulling the team together and all of the work going on on behalf of our attendees joining us today at the liberty bank we do appreciate that as we wind things down just a couple of quick reminders a replay of this session along with the materials will be posted on the liberty bank website as you heard tim reference there are additional details from some of our past sessions there as well so you may want to peruse those items make sure that you're getting the full spectrum and of course reach out to your subject matter experts to help you through this journey i want to thank all of our attendees for investing the most precious commodity that you have that's your time with us today we do hope it was time well invested and i would like to note as we wrap up we have a lot of questions that came through we will be gathering those up as we mentioned at the beginning of the broadcast giving them over to the team so that we can provide additional details moving forward to all of our attendees though thank you again for your time and attention have a great day you