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well good afternoon this is Jody Hudgens I serve on the board of governors of the Florida Bar as one of the two public members and I'm happy to be here to present a banker's perspective to the Paycheck protection program we we have with us today Bryan Keenan Bryan is our senior executive vice president and chief lending officer at the bank and Kathryn Merck Kathryn is a senior credit analyst with our bank here in Naples just some background in perspective for those of you all that that do not know our bank or maybe in the northern part of the state of the are they each part of the state we're about a 1.6 billion dollar bank located and headquartered in Naples so with that said I thought what we might do is give just a brief overview of the PPP and our idea is to get through the 15 or 16 slides that we have and give time for some questions if any that we can get recorded for viewers who want to watch that a letter later time but let's let's talk about this the long count as of April 16th which was the last official tally where the numbers were sliced and diced there were a million six hundred and sixty one thousand loans that had been approved in that first ten days for three hundred and forty two billion dollars with ABI and of those three hundred and forty two billion we've all heard about maybe fifty or sixty billion dollars that has since been repaid that that for various reasons various further information and disclosure in in the initial around 4975 lenders participated I thought it would be interesting to also give you some perspective is how did we do in Florida and how did Florida do in relation to the other states and the in the in the country well you would as you would guess California had the most as far as loans that were approved through the PPP they had a hundred and twelve thousand nine hundred sixty seven long approved for thirty three million four hundred thousand dollars not to be outdone by California Texas had more loans 134 thousand seven thirty-seven but had had less in amount of loans that they they get approved which is twenty eight million four hundred eighty three thousand so where did Florida fit in that Florida came in at eighty eight thousand nine ninety seven so essentially almost eighty nine thousand loans for 17 million 863 so when you see that we're basically about two-thirds or maybe sixty percent of what Texas was and almost fifty percent of what California was New York had less loans than Florida but they had more long dollars advanced or approved at twenty million three hundred forty five so that gives you some perspective and just some other perspective I would tell you about is the majority of the loans were one hundred and fifty thousand and under seventeen percent as far as dollars and seventy four percent as the count of the total for fifty eight million loans in the theis from 150 to three hundred fifty thousand for about thirteen percent of the count or almost fifteen percent of the total dollar amounts by far the biggest category was the three hundred and fifty thousand to 1 million with a hundred and forty thousand loans made and approved dollars of eighty million dollars that was eight point four four percent of the numbers but twenty three percent of the amount of the loans that were approved average loan size during the first round was two hundred and six thousand we'll give you some updates on what we know about the average loan size in just a second construction was the number one industry the Nathans codes that that came in at thirteen point one two percent of total loans that were approved professional scientific and technical services with a twelve percent something interesting the Florida real estate real and Rendell and Leasing was only three percent of the total so it it fared well but would probably be much different with the numbers if you just looked at Florida the number one lender not disclosed but the number one lender had twenty seven thousand three hundred loans approved for fourteen million dollars the number two lender had 32 thousand ones approved for 10 million 309 so with that said the number one lender had a five hundred thousand dollar average loan which is by far greater than the majority and the number two lenders dropped all the way down to three hundred and twenty one thousand so where are we today through the 29th last night there were nine hundred and sixty thousand dollar loans that have been approved Monday Tuesday and Wednesday of this week for ninety billion dollars so here we are three days into the present our into the opening of the portal for PPP round two and we only have 90 billion dollars of loans that works out to ninety three thousand seven hundred and fifty dollars so with that I thought maybe we'll go to each of the panelists and let them give some opening remarks and LeBron I'll start with you and then Katherine will go to you okay thanks Jody and thanks for giving us the opportunity to talk about this with you all it's been a learning experience for everybody involved including the SBA the banks the borrowers and everything everything that in between our bank was never we weren't an SBA lender before this which a lot of the banks that are doing these we were in the same boat we did it occasionally 504 loan but we didn't do 7a loans or guaranteed loans just because of the amount of paperwork and follow through you got to have on them and we just kind of traditional community banks but we learned quickly on how to become an SBA lender after some pain and suffering here where it was a Friday about three weeks ago where the first round came live and our bank was not set up to be able to input loans through what they call their a Tran system which is an online system where the applications are put in directly to the SBA and once it goes through as long as it didn't have any errors or exceptions you get an automatic approval from the SBA with a SBA loan number and you're good to go it took us five days to get set up online with the SBA to be able to offer these so it was a 10 o'clock on a Wednesday night five days after went live before we got ability to input applications and then the following Thursday the money ran out in the first round showed he talked about nationally the numbers as far as where our bank did we did about 640 loans for about a hundred and thirty million dollars our average loan size was almost the same as the national average about two hundred thousand so the first round was our bigger clients that needed it we focused primarily on our customers although we would take a local company that had struggled with a bigger Bank in most cases so we did do some of those in the first round the second round we're finding both of the case where the bigger banks are really struggling with these the SBA opened up an alternative route where they could send in batch files and the idea was to make it smoother for the big banks and it's turned out to be just the complete opposite where these batch files are getting hung up and not being able to process and the numbers aren't going as quick they had projected the money would run out by today originally and they're only about a third of the way through it because the system on Monday was crashed at probably 80% of the day we were able to get through about 400 applications the first day we expanded our input team from about four people the first session to about 20-25 this next go-round a lot of training and got people all signed up and it was just day on Monday for us we were working till one o'clock in the morning to get done what we could do and it never got better at all even at that late hour so we called it a night around one o'clock it has gotten better since that time but the big banks now are actually referring clients to us because they are just at a loss on how to get things through and really struggling so it it's been a challenge you probably wrote it read a lot in the media about the struggles of the SBA they're real people were just not ready they did as many loans in one week when this first came live as they did in the prior 15 years combined so you know it's with good reason why they're struggling but they just did not expect the magnitude of the number of people inputting these things and the banks across the country so we've we got a good process now inside the bank from start to finish where we take the application we review it for completed news and accuracy and then we input it and then from there you know communication gathering all the CIP information that's still required and then you know documentation and then you know the next eight weeks we'll be trying to communicate clearly with our clients on what we need to get to be able to get as many these forgiven as we can because we certainly don't want to have a lot of little 1% loans on our books for the next two years the idea is we would love to have a hundred percent of them forgiven for our clients so why don't you give an overview of where it started what you were looking at catherine has probably looked at the longest in our bank the applications that have come in so she's somewhat of an ages expert on it although she's a young lady she's seen the most in that regard and so Catherine won't you give your perspective and experiences and then we'll get into the meat hi um yes I've probably reviewed several hundred applications and uploaded of I can't even count but it it's it's frustrating kind of for the banks as well as for the borrowers because the guidance was still being prepared as we were going through and the SBA produced the clearest guidance on Friday the 24th which was three weeks after the program started and indicated how each entity type could successfully apply for a PPP loan whether it's a sole proprietorship or a corporation reporting on 1120s or 11:20 C and it you know finally we got some some clarity there are still some holes in the system where a particular situation isn't covered for example a borrower who was in operation on February 15 2020 but didn't file a Schedule C or a tax return in 2019 there's no guidance on how they can apply and what they can use there's also some holes for companies that file on 1120s because if they have no payroll but they have distributions they can't count those but a partnership that files in 1065 can use net earnings so there's inconsistency and it's unfortunate some borrowers we have to say unfortunately the guidance doesn't cover your situation and we have to refer them perhaps to a different type of SBA loan for example the economic injury disaster loan program which we're not unapproved lender for but it's the only other option that we can provide to these borrowers so that's kind of what we're dealing with but we'll start to go through the slides for you now so I think you know we're all fairly familiar with what the program is it's a it's basically a loan to small businesses that will help them get through the next eight weeks of payroll the idea is to keep people employed keep those paychecks going out there is a forgiveness provision as long as certain conditions are met the and this is part of the confusing process the loan amount itself is based on payroll but it can be used for other purposes such as rent or mortgage interest or utility payments so up to 25% of the loan amount can be used for those purposes these loans are 100% guaranteed by the SBA and they do have a forgiveness provision there's no collateral requirements no guarantees a lot of the tests that the SBA would normally have such as you've exhausted all other types of credit opportunities those don't apply and there's also other regulations such as for franchises which normally couldn't get an SBA loan they can under this program a lot of franchises were automatically added to the SBA list to allow individual franchisees to qualify well we're on that slide Katherine let's talk about some of the questions that we seem to get from and it seems to me early on we got these from our attorney friends who were calling in representing their clients but they said your promissory note reference is that there's a liability here and that you as the individual are going to be liable we thought there were no personal guarantees well the SBA and its Universalist approach to doing documentation created a promissory note model form that was good for our business and good for an individual and so yes there were no personal guarantees that are required for this PPP lawn and yes the language in the note said that you're personally liable but if you're signing the document and you're signing it as an officer or registered as an officer of the company you're signing it for the company then you're not signing it individually and we never put a guarantee in front but if it's a self proprietor taking advantage of the universalness of the promissory note then of course it is an individual obligation and you're signing individual if you're signing as a proprietor so we had several that wanted to wanted us to call them box all that wanted us to argue and debate with them on that and we learned long ago that never argue with someone who can charge four or five or six hundred dollars an hour when when you're outgunned so we just said look you don't have to take the loan you don't have to take the loan tell your client they don't have to take the loan if they're not comfortable with the document in the language and I guess in all but maybe one case everybody said okay I get it we don't like it but we'll sign it and where else can you get a 1% interest rate loan for two years and the ability that most of it forgiving so I just put that out to you that if you have do you personally have haven't seen that or you're contemplating doing that or if you have clients that is the interpretation and and that is how we look at it the elephant in the room presently that we're all dealing with and you seen some of it and there's still not clear guidance some some clarity came out last night in some FA cues from from the SBA and Treasury and it's that SBA credit elsewhere tests generally when you do an SBA loan you have to demonstrate that for it not for SBA you could not obtain credit anywhere else and so the SBA benning being of course the lender of last resort however in the application you're asked to certify as as the authorized agent that current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant it's not exactly like created elsewhere but that's caused a lot of companies a lot of organizations a lot of nonprofits even and I guess the famous case is Harvard and we go as high as the Los Angeles Lakers have have seen that there was some angst from members of Congress in the media and they've paid back their loans and there was a safe harbor provision that the Treasury issued to allow these to be paid back without any liability but most recently last night the guidance was out there that the necessity and the liquidity if you're a publicly traded company is probably not going to work for you to get a PPP loan because you have the capital markets somewhat at your disposal if you're a normal operating company like but many companies the majority of companies in Florida how you determined that it were it not for this loan and the economic uncertainty that you could not have an ongoing business concern in operations of your company so that's not clear I think all of you all will will see that and I think you have to advise your clients and I think you have to think about for your own personal firm or individual as you practice wall and and think about that and be be aware of that so I'll stop right there and let select Katherine pick up and get off and then we'll get right back to Brian so we're on the next slide what does the PPP provide loan amounts are up to ten million dollars based on an average monthly payroll amount times two and a half the two times is really for your payroll and the extra half a month is thrown in there to cover rent utilities mortgage interest and those extra expenses as Jodi mentioned there's a two-year term with an interest rate of one percent and that applies to the amount that's not forgiven borrowers can apply for forgiveness after the initial eight weeks and ban
s have 60 days to make a determination on how much is to be forgiven a thirty also mentioned the guidance has not been very clear on the forgiveness portion which has a lot of borrowers anxious on whether and you know how are they going to keep track of expenses is it when the expenses are incurred or is it when they're paid and we just don't have the answers yet there are no payments due for the first six months of the loan and again we're not really sure if it's an interest-only loan for the rest of the two years or if it's gonna have to be amortized but those haven't been sort of those type of details haven't been sorted out the lows the uncovered period is from February 15 to June 30th the actual eight-week covered period is from the date of disbursement of funds on the loan and there's also a process where a borrower can refinance their di DL or their economic injury disaster loan into the PPP that's another sort of cloudy area I think as far as how much of that would be forgiven or not forgiven and then of course the last item that applicants are eligible to apply until June 30th 2020 is kind of sort of a joke because there will not be any money by June 30th captain let's let's stop right there and then we'll what let's talk about the the amount that is not forgiven and this will give you some clarity some some in the promissory note the promissory note says that you have six months of no payments but interest accrues interest only accrues at a at a 1% annual rate so for that first six months whatever you borrow is only accrued is a half a percent and the remaining 18 months of the term the loan amount has to be amortized and that's the way the notes are set up unless SBA again comes back out with some additional guidance the notes are set up to where whatever balance that is not forgiven will be amortized over the remaining 18 months of the loan so our advice to you if as an attorney as a firm however you would have clients however you personally might anticipate if you're not sure that all of your loan is going to be covered by eligible payroll cost and we'll get into the forgiveness calculation calculations here in just a minute then understand that whatever the amount is that you have to pay that amount back over 18 months and that works out to about 55 dollars a month for every thousand dollars you borrow so just understand that it's it's quite a steep amortization granted the interest rates only 1% but it can cause some borrowers and some individuals some economic stress so with that we can take these applications to June 30th and let's go on and talk about who can apply it Brian you want to you want to fill us in there yeah so really any small business owner 500 please can apply and there are some loopholes that were in the first that like a restaurant had a location under 500 employees they could apply that's how the Shake Shack and Ruth Chris met that set threshold which they've got bad press on and since prepaid there alone on but pretty much any organization nonprofits 501 C 6 s are not eligible is one thing that was clarified for us that we learned a little bit into this program yes you can see the the other slides there and what industry so it is pretty much any industry and part of the problem on from a bank standpoint on in putting these loans is we have two input into the system answers to questions that are not on the application for example it asks us to input what the NACE code is for the other standard industry and in a lot of these companies if it's ABC company we don't necessarily know what they do you know obviously if it's got a name that you know can tell you easily what it what they do and there's some guesswork we have to explain what the use of all the funds are upfront you know we know the eligible uses are being payroll rent benefits utilities and so forth but we have to break out on the input of the application the break down without the customer having to provide that to us upfront the number of employees if that question is asked but the application is not completely clear on as of what date our guidance is that the number of employees are what you had you know kind of pre pre coded which you know it's kind of the end of February February or 15th because when the forgiveness time comes we're going to make sure that the payroll dollars are equal to what the average was payroll last year close benefits and that the number of people are approximately the same number of people because it's not only dollars but you have to have the same similar number of people because you can't pay fewer people more money and need that that test you got to keep a similar number of employees on staff and the number of employees are thirty hours you know thirty hours per week FTE is considered one FTE so if you get a salary person is one and if you got four people work in a hundred and twenty hours that's that's for four people additional people so it's there's things that are not on the application that it's we have to explain we have to put in the system and it's just adds to the confusion and the unclarity that we important on the bank to try to explain these different nuances you know to our clients so it's it's been a bit of confusing time thrown this thing together so quickly Brian let's talk about what it can be used for yeah sorry there you go it's payroll including benefits obviously and it's just payroll that goes to your nine forty or nine forty ones on a quarterly basis so this Kathryn said if you take distributions as an S corp that doesn't go through payroll it doesn't meet the definition of a paycheck if you own your own building the interest is you know can be used as an expense if the debt was taken up before February fifteenth rent under lease agreements are enforced before February 15 it's so if you own your own building and a different name you're paying yourself rent that can be included as the one of the eligible expenses then utilities are broadly defined you know as utilities but that includes electric cable TV water gas phone you know any any utility bill that you have can be included in that but payroll has to be at least 75% of the use of the proceeds to get the best forgiveness braless before we go to the next slide let's talk about because we've had several questions as to me companies that have a large that said that like fleets or equipment Toulon dyestuff they cannot use the interest on equipment FF&E they can it's only the interest on mortgage obligation so that would be real property so when you see mortgage in there it's in there for a reason and it was specifically has said real estate related only not not for FF&E type stuff so be aware of that Brian alluded to it a bit and will introduce the thought about the 75 and Catherine the 75% of the forgivable amount has to be made up of payroll and what I've been telling folks is to calculate their their pay eligible payroll cost and we'll get into the actual calculations here in a minute and divide that by 3 and multiply it by 4 that's the most forgiveness you would be eligible for regardless and if 95% of your of your amount is made up of payroll cost you're in good shape you can use the other 5% or more to get to a hundred percent for these other obligations for what what that is so captain you want to talk about payroll cost I've overheard a lot of your conversations and I've seen a lot of your emails and your the you've become quite proficient in defining what payroll costs are and I'll let you talk about that this is probably been one of the most confusing parts of the process the initial guidance talked about primarily payroll costs and they mentioned 1099 expenses and it has later been clarified that 1099 employees are not to be included by a company because those individuals can apply for a PPP loan themselves so it's basically anything that's run through a form 940 941 any employee that receives a w-2 that's included in your end of year w3 that the kind of payroll costs that are to be included in the calculation it can also include benefits healthcare benefits as well as retirement benefits that are played by the employer so if the individual is paying for their health care out of their paycheck it can't be added it's already included in their gross wages but if the employer the employer portion of health care and retirement can be included that's where a lot of our applicants are very confused and needs the bank's help in sorting out what what is an eligible cost the lot of the payroll providers ADP for example is a big one they are preparing cares Act compliant reports for their clients which are helpful to the banks in itemizing all the various payroll costs although there was some confusion early on about FICA and Medicare type taxes and whether or not those should be included so some of the earlier reports provided by payroll providers were incorrect but those since been corrected we can also include state and local taxes that are assessed on compensation and for us here in Florida that really just means the Florida unemployment tax on the the only one that we've found this applies in our state and if you're not an employer you can still qualify if you're a sole proprietor or independent contractor if you receive 1099 income you can include that with your Schedule C it's based on the net income number for sole proprietors rather than the growth number and there is a cap of one hundred thousand dollars per individual so if you earned if one of your employees earned one hundred and fifty thousand you could only count 100 thousand towards the annual amount let me speak about least employees professional employment organizations peos think about the how that is calculated if it is yes employers are allowed to include employees that they leased the PEOs are doing a pretty good job providing the necessary documentation for the employers to provide to the bank's they have a cover letter that states that their client is using this PEO and they were providing very good reports to outline the eligible costs so the least employees are allowed to be included before we let you leave the seat the Mike talked about paid sick leave the program does allow employers to include vacation pay and sick leave basically anything that's kind of been tied in to the gross pay amount however an employer might break that out holiday pay and vacation pay and sick pay throughout the year there is an exclusion for family leave wages that have that fall under another part of the cares Act so we haven't really come across that situation for any of our applicants that's more than forgiveness almost that they come back and say one of their employees or one of the family members have got coronavirus needed to stay home they get paid through a tax credit you know the future versus using their so nefesh you can double dip yeah yeah yeah the process there yeah okay and one thing on the overtime about what gels want payroll one other wrinkle that wasn't on here is that we're sitting here in Naples Florida that's very seasonal that actually there's a seasonality ability to for companies that use February through May last years if they spiked up during this period when we're going through this Hoban nineteen if they're seasonal and a higher payroll that during this period last year they can he's the seasonality factor and actually have a higher amount rather than spreading it over over the 12 months prior that's another thing that some restaurants in particular have done you know down here okay so up to this point we've talked about how you calculate your payroll cost and how the program works but let's talk about the will my lawn be forgiving and I I introduced the thought to you that it's all this all based primarily majority the majority on payroll cost and whatever those eligible payroll cost are that Kathryn just talked about divided by three and multiply that times four and that's the most you could possibly get forgiven if it's more than your loan amount great good for you if it's less than your loan amount then be prepared that at the end of your six months to start making eighteen monthly payments of whatever that remaining balance that isn't forgiven so what's included payroll cost and the forgivable amount interest payment on a mortgage now the mortgage had to originate and be on the books prior to February 15 any subsequent mortgage after February 15th that interest is not part of the eligible forgivable a map same thing with interest payments on a debt that originated prior to February 15 that's a that's a bit of a misnomer and SBA has specifically said that its mortgage real estate debt this bullet point says another debt and let's hope that it is but I'm we're we're telling our folks that it's not based on firsthand conversation with with the SBA and the Federal Reserve Bank of st. Louis last week that we all participated in in the payment of rent on a lease that began prior to February of 15 so all eligible costs had to be incurred and had to be contracted for before February 15th and then as Brian talked about the utility service water Texas water internet electricity telephone etc for for your operation had to be contracted out and on the books before February 15th amounts forgiven may not exceed the principal amount obviously of the lawn and the accrued interest and the loan proceeds used for any other purposes while not illegal necessarily they're not forgivable and any canceled indebtedness this is the good thing any canceled indebtedness will not be included in the borrower's taxable income unlike a foreclosure or unlike a deed-in-lieu where you forgive that and you make a deal with the borrower to keep from having to litigate and getting tied up for a couple of years in court and whatever the amount that you end up forgiving where we have to issue an income to that to the borrower in this regard that is not a taxable event and so that is good to know we talked about no more than 25 percent of the non payroll cost can be forgiven and Treasury said last week with the Federal Reserve Bank of st. Louis called it we were on that they intend to issue more direct specific guidance on this matter between now and by the end of May I would think it would be as they've done throughout it'll be towards the end of May and not between now so that's what we're telling our folks there the purpose of the paycheck is to help retain your employees so you have to keep really good records and Brian talked about the number of employees and full-time equivalents but in the calculation of forgiveness if you have 200 full-time and 50 part-time the number of employees at the end of the period for the eight week period that after you got your disbursement is counted as 250 so they won't let you use and they just came out with guidance last night in the April 29th if they cues from the treasurer that talked about that a lot of restaurants like the fast food restaurants the mother the families don't want their children working in fast foods and being exposed to the potential for for the coronavirus so a lot of those part-time younger adults are or not are leaving the work and so the restaurants are losing those but it is eligible to rehire and to hire new ones as long as the number and the average there is not out of out of line if you've laid off employees you can still be forgiven for the full amount of your payroll cost if you rehire those employees by June 30th so you have to rehire them by then your eight week period starts again at the date that your loan is closed and funded and remember that the amount of the loan that is not forgiven will convert into a an 18-month long not two-year loan as the slide says but an 18-month loan at one percent interest I'll stop right there and see if Katherine or or Brian has anything to add to that do you think it is okay the auto loans the economic injury disaster loans if if any of the loans were applied for for the Eid L loans auto loan related to Cove at 19 between January 31st and April third you can refinance those into the PPP loans for loan forgiveness purposes you cannot take out an economic injury disaster loan and a PPP loan for the same purpose though and the remaining portions of the economic injury disaster loan will have to be repaid
as loan payments if you take advantage of the grant it would be subtracted from the amount forgiven under the Paycheck protection program so you cannot double dip there what the employees need to to do employers need to do to be able to calculate it's always the devil is in the details of the payroll cost and all that catherine again go through that if you will but remember it's the period that eight-week period what your payroll costs were some have said well I paid I paid my wages last Friday and you funded your loan this week to me on a Tuesday or Wednesday and the pay periods are going to overlap and I tell them to keep show us good records of their payroll expense and show us what an eight week payroll expenses and show us that they've paid at least eight weeks of payroll expense and that will be sufficient but Catherine I'll let you go on and talk about the documentation that's needed thank you Judy so I barely covers I think we've we've discussed it already it's how with the documentation that is needed up front at the application at the time of application the simplest the way with the we've been finding is to look at the form 940 or 941 quarterly 941 forms to calculate the eligible payroll amount and that covers most of these categories healthcare benefits and insurance and retirement benefits we may need to rely on something like internal reporting or reports from for example a retirement benefit provider they can usually provide reports that show how much the employer contribution was for the year and that can be used in the calculation and the same thing for healthcare benefits usually sort of across for example can provide a report of all the amounts that were paid we're going to kind of move through the slides quickly and then Jonathan if back back to you it's with sort of our if there's any questions that could be submitted and we will reserve time if not we'll we'll finish up with Kathryn or I'll let you continue yeah there's just a couple more important quotes than we have touched on and compensation for any individual it's over 100 dollarz has to be cut back to a maximum of $100,000 and the compensation also must be for an employee whose principal place of residence is in the United States so if you have employees that work outside the United States then they must be excluded all together for sole proprietors independent contractors that mostly people that report on Schedule C they are going to be using their net earnings number again there is a one hundred thousand dollar limit in the calculation and they will need to show proof of the income that my book might be in the form of 1099 or invoices or other internal recording so the this documentation then is really on the forgiveness side is when you'll need to provide the documentation on the expenses that are eligible to be forgiven and these expenses listed on this slide they can only make up 25% of the amount that is forgiven and then the application form does include several certifications that have to be initialed individually again the first one is getting a lot of press that the you have to need the money is what the first condition on the slide there and that you will use the proceeds to keep people employed with a small amount to be used for other expenses and you can only have one loan the SBA system bases this on the tax ID number of the applicant and that you haven't received a loan for this very similar purpose for the SBA okay all right Katherine thank you Brian any closing comments anything you'd like to say no sir fielding questions there might be out there Jonathan I I will we'll open it up if there's a method to get questions to us we'll we'll look for that no feedback from you will we'll close it out I'm sorry I thank you guys for the presentation if you look down at the bottom of your screen you'll see a little QA button there's about 34 questions waiting for you now okay don't we don't see it okay I can start reading them off today so the first question is from Charles Concannon and it's just a quick question is it worth it for a sole proprietor with income approximately thirty thousand to apply for the program self-employed and no other employees working part-time with reduced income yeah so that sets twenty five hundred bucks a month times two and a half get some what about sixty two hundred dollars if that helps them that helps them I mean we we've done one loan for eight hundred dollars can we did one loan as high as four million bucks so it really is up to individuals need and you know when we're doing these things the one person for six thousand maybe more important than the three million dollar one for a huge company we don't think in the next few days and what this happened we don't think funds will run out so it's not too late find the community banks that you're in the market you're in you're happy - oh you're welcome to reach out to us but on the community banks where you can get on the phone and talk to someone who's part of the of the input team and the team that is screening the loans and processing them to submit so Jonathan we'll go to the next question the next question is when calculating the amount you must spend on payroll will that include the company's contributions to 401ks correct that's all that's correct even though it's a non-taxable amount that is payroll cost and it is an eligible amount you own the clock Jonathan Johnny now what an employer who gets a loan be able to require the employee the including loan for salary purposes to reimburse the employer if production of the employee is not at a specific level demanded by the employer I don't I don't think that would that would fly I think that would be contrary to how the SBA is has set it up and not not I just think that would be problematic we'll leave it at that yeah I think I mean to me a lot of this is just unemployment replacement where people have been trying to get unemployment they can't get it to the government's putting money out for employers to help you know keep their people eating and paying their rent you know a lot of these people that are getting paid or getting paid to stay home right now so I mean it's hard to put on those kind of requirements to someone that really can't work because their place is shut down by government you know requirements another question from the attendee involves a little bit of frustration with the process and what I mean if you guys have any suggestions as to just how to keep fighting through the the downtime and the issues that I think you kind of talked about at the beginning yeah it's yeah part of its operational technical with the SBA site part of it is the bank they're dealing with either they're ill preparedness or just inability to do it but it seems like this last go-around I would encourage you to go to a smaller bank or credit union to do it versus the big guys because they're really stumbling and we're getting more referrals from bankers at big banks directly last couple days we have another question here about the eligible entities and we've covered you know with who is eligible but are there any that are not employees over 500 employees that do not meet the franchise test under the SBA guidelines and I don't want to get into too much debt but it's pretty open open-ended yeah there's some like gambling related industries or certain industries that are excluded but pretty pretty small number really there is a lot of guidance on to Treasury gov website for the program there's a good document called how to calculate the lump amount which has very good information depending on the type of business on how they file whether it's Schedule C or a 1065 or in 1120 but it does have a lot of si cues as well which are helpful for a lot of these questions on what what is eligible okay so we have an attendee who received the Florida emergency bridge loan which states that we have to use SBA money to pay it back and some of the 25% of the PPP money be used for this and be forgiven I don't think that's that's the state program I believe the emergency bridge I believe is a state not the economic injury disaster auto economic in your disaster has components that are forgivable in the PPP but the emergency bridge to the state or not a question about pre paying rent are they able to prepay rent this is there is no way I'll be able to spend 25% of my loan on rent and utilities no because you've got to document what's your leat your rent contract your lease contract says and it will only be on eight weeks worth of whatever that is not not what you prepaid yeah now that being said if you know you're eight weeks in you know June what's you know eight weeks from today June 28th whatever your pain your July rent you know come June 7th that probably okay but you probably can't play Auto September's rent in June you know correct okay well the hundred thousand dollar salary limit used to calculate payroll cost of Y to calculate the amount forgiven in other words should the company cap the amount of salary paid through PPP funds to their employees as long as it yes at a hundred thousand yes because a hundred thousand is the most that is eligible for that employee and so a small retail business that is not deemed essential has been forced to be closed since the stay-at-home home order went into effect would be eligible to get a PPP loan to pay employees who are not working correct our requirements for nonprofits different they have to prove loss of donations during that period if donations are grants not revenue fund the program services and no staff laid off despite fewer sources being off well nonprofits aren't our base the loan amount PPP is not based on revenues based on employee cost and utility cost in occupancy cost if there's a mortgage yeah I mean they'd love to meet the certification of economic need you know I think there's a Harvard Foundation got one and they got a fully million dollars yeah they got a forty billion dollar endowment and they paid it back so you know I guess a large nonprofit lot to meet that test you know most small nonprofits certainly are deserving of this our borrow is excluding some payroll costs amounts being paid to a third party you process payroll fees make you repeat that job sure our borrow borrowers excluding from payroll costs the amounts they pay to a third party to process their payroll payroll fees yeah you indicated that mortgage interest could only be included for real estate but then in a slide it said on any debt incurred before February 15th would that include credit card debt and then a second follow-up to that the utilities slide said transportation expenses does that include people I think transportation if if you provide mass transit sort of stuff for your employees and such and as to the mortgage interest I thought it was for fixed FF&E initially I read and it was being quoted as that way but I heard firsthand last week a Treasury official with the st. Louis Federal Reserve Bank call say that it was mortgage interest only on real estate related so maybe between now and the end of this month at the end of May we'll get some more definitive and they'll they'll reconcile those those thoughts another question is is a cover payroll expense for forgiveness the employer portion is the well the parts is included in the employees pay yes it's included but not the additional employer right right correct kind of a follow up to that is kin distributions to an S corp owner be used to calculate PPP in addition to w2 income on which vicos paid no distributions are not allowed to be included as a payroll yeah it's been a sticking point a lot of S corp LLC so legitimate way to you know take a distribution from a company but she's not qualified by this program so we received an e IDL advance on the same day as PPP should we return the e IDL advance if you if you did it pre pre kovat but if you did a coven 19 if you will and it's pre those dates that part could be treated like a grant the other part could be included in the amount of your PPP loans and then final question does the PPP line require employees to be reversed or back pay the employer previously decreased staff salaries by 33 percent before receiving the loan does the PPP loan require employer's to be responsible for back pay if the employer previously decreased staff salaries by 33 percent before receiving the loan I don't think so no no requirement if they was and a little bit more to make up for you know not getting pay for a month I guess they could do that but it's not a requirement we're gonna be respectful of everybody's time and go ahead and end it there just want to let everybody know that the Scioli course number for today is going to be three nine four one and in the next 24 hours you will see a link to the recording along with the course information and to these slides as well and I wanna thank our presenters today and thank all of our attendees for attending our pleasure thank you
