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Small Business Clients (Update: May 19, 2020)

Update: May 19, 2020 (10:15am E)

On Friday, May 15, 2020, the SBA released the PPP Loan Forgiveness Application. The application and instructions inform borrowers about how to apply for forgiveness of their PPP loans, consistent with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

You can download the complete PPP Loan Forgiveness Application here.

You can visit www.SBA.gov for the latest information and to view the application and instructions.

Update: April 3, 2020 (1:20pm E)

This morning I received an email from a banking colleague with additional information on the Paycheck Protection Program or PPP. He indicated that due to the lack of details from the SBA, his bank is currently cannot accept the loan applications but are prepared to begin accepting applications as soon as the SBA provides the necessary details (you might recall I mentioned the lack of a Standard Operating Procedure last evening). In anticipation of what SBA will likely require of borrowers, he did provide the following list as a starting point for businesses to begin compiling documentation:

• Articles of incorporation/organization
• Bylaws/operating agreement
• All owners’ drivers’ licenses
• Certification that all employees live within the U.S.
• 2019 IRS Quarterly 940, 941 or 944 payroll tax reports
• Last 12 months of Payroll Reports beginning with your last payroll date with corresponding bank statement (if not available, employee pay stubs as of February 15, 2020 with corresponding band statement and breakdown of payroll benefits)
• These 12 months of Payroll Reports should include the following:
  – Gross wages for each employee, including the officer(s) if paid W-2 wages
  – Paid time off for each employee
  – Vacation pay for each employee
  – Family medical leave pay for each employee
  – State and Local taxes assessed on the employee’s compensation for each employee
• 2019 1099s for any independent contractors that would otherwise be an employee of your business (excluding 1099s for services rendered).
• Documentation showing the total of all health insurance premiums paid by the Company Owner under a group health plan for all employees and owners.
• Document the sum of all retirement plan funding that was paid by the Company Owner (exclude monies that came from the employees paycheck contributions). This includes 401K plans, Simple IRA, and SEP IRAs.

This is a best estimate based on all the various bits and pieces of information we have been putting together and please understand that additional information may be required by the US SBA when we get the official details of the Paycheck Protection Program.

Additionally, I encourage you to research the information contained in the following links:

Small Business Guidance Loan Resources (LINK)

US Treasury Overview (.PDF)

US Treasury Borrower Information Fact Sheet (.PDF)


April 3, 2020 (11:15am E)

The Paycheck Protection Program (part of the Coronavirus Aid, Relief, and Economic Security or CARES Act) and the NJEDA’s Small Business Emergency Assistance Grant. These programs are continuing to evolve as evidenced by a communication I received this evening from a contact at TD Bank indicating the SBA has not yet finalized its Standard Operating Procedure for the administration of the Paycheck Protection Program (PPP). To that end, I am continuing to research the programs and am scheduled to participate in online seminars beginning next week to further my understanding of the programs to better assist you.

Please note this is for information sharing only and is not intended to be a complete list of programs applicable to your unique situation, nor should it be considered a recommendation. Many if not most of the programs are exclusionary meaning an organization is precluded from participating in multiple programs. As mentioned, these programs are evolving daily, therefore it is impossible to provide a comprehensive review as many of the details do not yet exist. I only want to provide whatever assistance I can to you as a Client of the Firm. I will provide links to various websites and have included some attachments which do provide available details and restrictions. With that said here are some programs currently offered by the Federal and NJ Governments:

PLEASE NOTE, small businesses and non-profit organizations (less than 500 employees) can begin submitting applications effective April 3, 2020. This loan program will be available through SBA 7(a) Lenders, Federally Insured Depository Institutions, Federally Insured Credit Unions, and the Farm Credit System. Generally, a Business can borrow up to 2.5 times its 2019 average monthly payroll (including but not limited to items such as salary, wage, commission, tips, payment for vacation, parental, family, medical or sick leave, health care benefits/premiums, retirement benefits, state/local employer tax liabilities, etc. but excluding items such as but not limited to compensation in excess of $100,000, payroll and income taxes, qualified sick leave wages under the Families First Coronavirus Response Act, etc.). A portion of the loan amount may qualify for forgiveness if used for eligible payroll costs, mortgage interest, rent, and utilities (restrictions apply and amount forgiven can be reduced). This program is also available to Sole Proprietors, Contractors, and Self-Employed individuals with differing restrictions; applications for this group can be submitted beginning April 10, 2020. Additional details are available at www.treasury.gov.

This refundable tax credit is applied to the employer’s Social Security Tax Liability and is equal to 50% of the wages paid to non-working employees, during the COVID-19 Crisis. The credit is capped at $10,000 per employee for businesses that have experienced a full or partial shutdown.

From April 2020 through December 31, 2020, Businesses can choose to defer (please note this is a deferral to address cash flow, not a waiver of the obligation to pay) the 6.2% of the employer’s social security tax liability with 50% of the 2020 liability due by 12/31/2021 and the remaining 50% due by 12/31/2022. This program is also available to self-employed individuals, but these individuals can only defer 50% of their same liability. This program is NOT available to Paycheck Protection Program participants.

Employers with less than 500 employees can claim a credit against its social security tax liability equal to 100% of an employees qualified sick leave wages plus the proportionate share of health care costs incurred plus applicable employer Medicare Tax on such wages. Again, restrictions do apply.

The State of New Jersey offers a host of additional loan and grant programs. From its website, www.covid19.nj.gov, New Jersey has launched its “Emergency Assistance Eligibility Wizard”. By entering entity specific basic information such as where business is conducted, how long in existence, physical location, type of industry and business related information, size, revenue, existence of financial statements, ownership, along with questions about the impact of the COVID-19 Pandemic; the tool will identify applicable programs. The Eligibility Wizard is accessed by navigating to www.covid19.nj.gov, selecting the “For Business + Organizations” button, and selecting the Wizard. PLEASE note, the NJEDA will begin accepting applications for the “Small & Medium-Sized Businesses – NJEDA Small Business Emergency Assistance Grant” beginning Friday, April 3, 2020 at 9:00 AM. The application process will close Friday, April 10, 2020.

As more information and details become available, I will make every effort to share them as appropriate. I am monitoring various sources of information including the various government websites but also through organizations such as the NJCPA along with financial institutions.

Please contact me if I can be of further service. Please stay safe.

– Joan

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