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Payroll Protection Program (PPP)

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  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    @Brian_SBM said:

    1b) You cannot use PPP proceeds to double-dip: if they are receiving UI but you want to use PPP proceeds to pay additional money on top of that--maybe to make them whole--then you could use the proceeds for your contribution. Be clear with your banker about your situation with your employees, and hopefully they can advise you on how much you should take and what you can use the $ on.


    I would like to make my employees as close to whole as I'm able, but now that sounds like somewhat of a tightrope walk. In order to correctly find the right amount to request for the PPP loan, I would need to know exact dollar amounts of UI benefits that each of my employees will be receiving over same period. Is that even possible?

  • davejicdavejic Member

    I applied for PPP with Chase and summited info originally requested but than I got email to complete next step of application. It doesn't allow me to submit any other info and I get message I'm denied. I also applied for EIDL.
    Chase is not providing any reason for denial is it because I applied for EIDL also? I thought we should apply for both. Any guidance/insight is appreciated!

  • mparindamparinda CEO Member

    I understand that PPP will be forgiven if used within 8 weeks after the loan is approved, 75% for payroll and 25% for rent. I own a salon, which is a non-essential business. What if, after I got approval for the loan, I'm not yet allowed to reopen my business because of shelter-in-place. That means I don't get to take advantage of the loan being forgiven? I mean I don't see the point of hiring the employees back when business can not open. Having employees when business is closed doesn't help generater revenue. Plus the employees get less from being hired back than from unemployment plus $600/week. (Most of my employees are part-time.) That means PPP won't help reopening the business. And business may have to permanently close and lay off all employees for real. What is the best way to use PPP when business is not yet allowed to reopen.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @mparinda That is a very real concern, and one we have been hearing a lot. The purpose of PPP is to bring back employees onto payroll, but you're right in identifying that there is nothing for them to do when there is no revenue. You may want to consider a smaller PPP loan to cover your salary costs (only if you are on payroll) +25% rent/utilities, or consider an Economic Injury Disaster Loan instead, which provides more flexible working capital.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    @Brian_SBM I wanted to swing back to my earlier question regarding the interaction of UI benefits and PPP loan amount.

    If my employees are potentially receiving UI benefits at the same time that I will be paying them through PPP loan funds, does that need to be included in calculations of the PPP loan amount that I request? And if so, how? I understand the double dipping part. But I'm fearful that my loan amount could be too large given the UI payments, and I could be somehow saddled with bad percentages at the end of the 8 weeks, despite my best efforts.

    Or if my loan amount ended up being too large because of the UI payments, will that be considered in the process of assessing eligibility for forgiveness?

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    I have employees who have filed for UI benefits from the state of California. We are in a disaster area. Does anyone happen to know how I can calculate what weekly dollar amount they will receive?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @rosenzweig70 Re: your first question, yes I would take your employees' UI benefits into consideration when deciding what size of loan to ask for. You don't necessarily have to accept the full amount that you qualify for; or you can bank the loan and repay it if you don't spend it all on qualified expenses. I would definitely discuss with your banker. As far as the calculation goes, I'm not up to speed on CA benefits but will check if someone else on my team can respond.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @davejic I would keep the ball rolling in both courts.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    @Brian_SBM said:
    @rosenzweig70 Re: your first question, yes I would take your employees' UI benefits into consideration when deciding what size of loan to ask for. You don't necessarily have to accept the full amount that you qualify for; or you can bank the loan and repay it if you don't spend it all on qualified expenses. I would definitely discuss with your banker. As far as the calculation goes, I'm not up to speed on CA benefits but will check if someone else on my team can respond.

    Thanks Brian. If my PPP loan is approved it will apparently be for an amount equal to exactly the 2.5x monthly payroll average. That's how Chase's online application worked, and apparently (according to them) there is no room to subsequently lower the requested loan amount. And that may be fine. But I'd like to throw out another simplified example to test it. This is similar to the earlier example I asked about, but differing in that presents the case of having a much greater amount of un-needed PPP funds.

    So -- assume that the 2.5x average monthly payroll calculation puts a PPP loan in my hands of $100. In the following 8 weeks I spend $30 on qualified payroll and $8 on qualified rent, utilties, and healthcare premiums. And I repay the $62 balance without delay. I am also careful to make sure that at the very least all of my full timers are re-hired by June 30.

    Does my scenario still look strong to pursue forgiveness on the $38?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @rosenzweig70 that would be my assumption, but I would confirm with your bank before accepting the loan. The SBA guidance on the forgiveness side is still a work in progress.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    PPP loan forgiveness hinges on maintaining full time employee levels, with the provision of having until June 30 to hire-back any FT employee that had been laid off or furloughed.

    So let's assume I was in a position to get furloughed employees back on payroll with PPP money for 8 weeks in May and June.

    What happens if on June 30 our business is still not allowed by the city to open our doors? (We are a beauty salon currently mandated by local order to remain closed.) At that point we will have ended our PPP window and we would unlikely be able to keep those full time employees on payroll in July.

    Do you believe that, under those circumstances, sending those FT employees back to seek UI benefits on July 1 jeopardizes our pursuit of loan forgiveness?

    One month ago this scenario wouldn't have dawned on me, but now it seems like a real concern I'd want to have figured out before spending PPP money on payroll.

  • mastertechmastertech Owner Member

    Hello! I enjoyed your informative session with the FL SBDC! Thank you!

    I have a question that I am still not 100% sure about so wanted to ask again to make sure.
    We are an LLC, my husband and I each own 50%. Last year, in April, we applied to be an S Corp and started paying ourselves a salary. The rest of our income comes in the form of owner's draws from company profits.
    We no longer file a Sched C but rather a separate business return (1120S).

    1) For the PP program, can any of that compensation (owner's draw/profits) be included in the salary costs (like it would if we were a sole proprietor) or can we only claim the salary that we paid ourselves, along with retirement benefits, employee taxes, and the other things listed?
    We have no employees besides the two owners (ourselves) and my husband works full time and last year I worked very part time.

    2) And for the PPP, are both full and PT salary costs included in the calculation?

    3) Are the employee tax and insurance costs that you can include in salary calculations just the amount the company pays, or can we include the amount withheld for us from our own paychecks?
    Would that include unemployment/reemployment taxes (state and Federal?)

    4) We did not convert to the S Corp until April 1, 2019. Can we use 04/01/2019 to 04/01/2020 as our annual calculation period? If not, we would have to include profit/owner's draw for Q1 as well for 2019.

    Thank you for any answers.

    We also plan to apply for the EIDL loan.
    5 If we request the advance, is it only for the FT employees? (that would be one for us.)
    6 And would any advance we would receive, though forgivable, would be taken off the forgivable amount of our PPP loan forgiveness amount?
    7 Can you only take an EIDL advance but not fund the rest of your requested loan amount if you find that you do not need it?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    Hi @mastertech

    1) Owner draws/profits are not allowed in the calculation for max loan amount and forgiveness. Only that which can be documented as a payroll expense (forms 940/941).

    2) Yes, full-time and part-time costs are calculated; anything that is on the above mentioned forms, up to $100,000 per employee. 1099 contracts, however, are not. You cannot count independent contractors that you have paid.

    3) It would be state and local employee taxes that the company pays. Federal taxes of any kind are not factored into the calculation or an allowable expense.

    4) Talk to your PPP lender about this and explain the situation. It's possible you can get your average monthly payroll calculation from the date you incepted the S-Corp, but not 100% sure on that. See what your bank requires.

    5) Not sure on this one, but I believe so.

    6) That is our understanding, though the process is murky. Definitely let your PPP lender know if you have applied for and/or received the EIDL advance.

    7) That is our understanding, yes.

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