Cares Act FAQs

CARES Act Frequently Asked Questions and Answers


All FAQs below:

Bank questions

We have heard from clients and from news reports that many banks are not participating in the PPP process. We can pass along banking contacts for Wells Fargo and City National Bank that we have been providing to clients.

We have heard from clients and from news reports that many banks are not participating in the PPP process. We can pass along banking contacts for Wells Fargo and City National Bank that we have been providing to clients.

Yes

Compensation and staffing questions

At the moment this issue is unclear and we are not able to advise that a housing allowance is includable as wages for the PPP calculation given the limited guidance published.

As long as the clergy is on the payroll and the amounts are included as a W-2 wage then we do not foresee any issues with including the amounts in the payroll costs. At the moment it is unclear if the salary amount includes an amount designated as housing allowance so we are not able to advise that a housing allowance is includable as wages for the PPP calculation.

Independent contractors (IC) are not included in the loan amount for the employer-applicant. However, the Ics themselves can apply for a PPP loan using their Forms 1099.

The $100,000 threshold is applied to all payroll costs. Payroll costs per employee are excluded over the $100,000 threshold. Therefore, employees earning over $100,000 for the period can still be included in the calculation.

Part-time employees count as well.

Yes, bonuses are included as payroll costs.

Both can be included.

Gross, before taxes. Benefits are considered payroll costs.

Yes, as of now. The SBA plans to issue additional guidance on loan forgivness at a later time.

12-month average used.

Only use the payroll costs from FTE period.

Neither

Yes

Not included

Counting employees

They have not defined in the Act. However, An FTE is the hours worked by one employee on a full-time basis. The concept is used to convert the hours worked by several part-time employees into the hours worked by full-time employees. On an annual basis, an FTE is considered to be 2,080 hours, which is calculated as: 8 hours per day.

Unfortunately, the PPP is measured by actal payroll paid. It does not look like there is a provision to account for in-kind contributions.

If you reduce your headcount the forgiveness can be reduced regardless of why those people are not included anymore. This makes it important to rehire if you need the help and the person was let go for another reason.

If they were hired prior to the end of March, please check with the bank to see if they will allow the 12 month period to include March 2020. Some banks ending the 12 month period then anyway. Hopefully this will allow for you to capture the new employee.

No because the payroll cost calculation looks at the most recent 12 months of payroll.

The loan is determined from payroll costs.

Documentation Required

2019, banks also looking at Q1 2020

Yes, Banks may have additional disclosure requirements.

The calculation for the SBA 7(a) PPP loan states that once the borrower receives the loan proceeds, the borrower will not be responsible for the principal and interest on the loan amount if 75% of the proceeds are used on payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020. And utility payments under service agreements dated before 15, 2020, for the eight-week period following the date of the loan. The average payroll calculation is used to determine the amount of the PPP loan.

Loss of income is not a factor in the forgiveness program.

No, they are not.

I suggest leaving it blank. If you are able to, please discuss it with your bank to see what they prefer.

No

Eligibility

Yes you would get credit if you changed the measurement period to 2020.

Yes

Yes

You wil want to work directly wiht your bank as to the documentation that they require to process the PPP loan application.

As of now, only 501(c)(3) entities appear to be included in the CARES Act as non-profit companies that will qualify. We anticipate regulations being released in the coming week that may provide more details.

Unfortunately, a church that is not a 501(c)(3) organization would not be includible based upon the current guidance from the government. Non-profit organization that have received 501(c)(3) status are the only non-profit entities appear to be included in the CARES Act . We anticipate regulations being released in the coming week that may provide more details.

I would leave it blank and/or ask your bank what they prefer.

Yes

A definition of which Private 501(c)(3) nonprofit organizations are eligible for the EIDL have not been specified but nonprofit organizations that are principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting, or primarily engaged in political or lobbying activities is not eligible to receive an EIDL.

The affiliation rules are unclear at this time. We are expecting additional guidance this week.

The procedures have not yet been released by the SBA but should be released on or before April 13th. However, we would recommend to collect payroll records from the local University to substantiate that this was payroll for the non-profit. You can apply for the PPP now and attached the respective supporting documentation with a note.

1

Foregivness

Same definition of payroll costs for the loan determination. Yes, both of those are included for purposes of forgivness.

The interest rate on the loan is going to be 1% if the full loan is not forgiven.

Forgiveness is not guaranteed, but as long as the terms are met the loan will be forgiven.

If you reduce your headcount the forgiveness can be reduced regardless of why those people are not included anymore. This makes it important to rehire if you need the help and the person was let go for another reason.

How is it funded?

Lump-sum

The timeline for the loans to be issued and payments remitted to the borrowers is not clear at this time but the government has made it clear that they should be originated as quickly as possible. The old SBA loans would take from 6-8 weeks but these should be significantly faster.

The date that the loan is granted not the date of application.

How to access the emergency $10,000 grant

EIDL program – https://covid19relief.sba.gov/#/

Miscellaneous questions

Advised that the employee retention credit is a refundable tax credit of 50% of up to $10K in qualified wages eligible employers continue to pay workers between 3/12/20 and before 1/1/21, despite their business suffering adverse consequences of the Coronavirus.

The loan is determined based off of payroll costs. The loan funds can be used on payroll, mortgage interest, utilities, and rent.

Their own

We are awaiting regulations from the IRS but the $300 above the line deduction for taxpayers will only be allowed from some 501(c)(3) organizations that a taxpayer contributes to.

Qualification questions

Yes

1%

The program is to help businesses who were harmed by COVID-19 between February 15, 2020 and June 30, 2020. The program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payroll. See attached for your reference.

$10,000,000

It applies to 501(c)(3)s, but it does not apply to 501(c)(6)s.

Contact the bank for this answer

Beware of indviduals calling themselves brokers and expecting money

Yes

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