ppp forgiveness webinar q&a · ppp loan received an sba loan number before june 5, 2020, the...

Disclaimer - The information is (a) based on the most recent SBA guidance and is subject to change and (b) is general guidance and may not apply to your individual facts and circumstances. We encourage you to contact your financial planner, accountant and/or attorney for specific guidance as to requirements and documentation

8/14/20

PPP Forgiveness Webinar Q&A

We have prepared the following Q&A from questions we received during our PPP Forgiveness webinar. For any questions specific to your business, we recommend you reach out to your financial planner, accountant or attorney. Your relationship matters to us and we are committed to supporting your needs. If you have any immediate questions, do not hesitate to contact your PPP Forgiveness Consultant.

Categories

Application Process Covered Period Economic Injury Disaster Loan (EIDL)

Evidence EZ Form

Forgiveness Amount

Full-Time Employees

Loan Forgiveness Loan Terms

Non-Payroll Expenses Non-Profits Owners

Payroll Expenses Presentation, Survey or

Borrower Resource Center

Safe Harbor

Sole Proprietorships Staffing Taxes

***Categories are clickable links***


8/14/20

Application Process

I would like to speak to my PPP consultant to clarify some things that were said in the recent webinar. Can you describe how Investors will guide borrowers through the forgiveness process? Each Investors Bank customer has been assigned a PPP Loan Forgiveness Consultant. Your assigned consultant will be your primary point of contact to help you navigate through this process. If you need to identify your forgiveness consultant, please call: 855.422.6548 or email [email protected]. We have also created a Business Resource Center with the most up-to-date information on PPP forgiveness, which you can here: https://www.myinvestorsbank.com/hereforyou/Relief_Programs/PPP_Loan_Forgiveness. I believe I am ready to start my forgiveness application, what should I do? When will the forgiveness application be available on the Investors portal? Would there be a URL from Investors to access the forgiveness application? Investors Bank is diligently working to have the application portal ready to start accepting forgiveness applications, which is ultimately dependent on final guidance from the SBA. Our commitment to you is that once the SBA is ready to accept applications, we will be ready shortly thereafter. Please continue to work with your Loan Forgiveness Consultant to evaluate your readiness to apply for forgiveness. Since we completed the loan application via the Investors Portal, we do not have a copy of it. Is there a way to get that? Borrowers should work with their loan forgiveness consultants for any specific requests related to the original loan application. When will Investors Bank start collected PPP Forgiveness application supporting documentation? Investors is developing a document request list, which will be communicated to all borrowers soon. At a high level, borrowers will need to provide evidence supporting payroll expenses, non-payroll expenses, and FTE count at the time of application. Once portal is up and running, must the application be completed in one session? Or can it be saved and returned to at another time? Once the portal application process is finalized, we will release much more additional information about the process and how it will work. Based on the current portal capabilities, borrowers are able to save their drafts and return to it at any given time.

https://www.myinvestorsbank.com/hereforyou/Relief_Programs/PPP_Loan_Forgiveness


8/14/20

I received a SBA Loan Forgiveness intent form. It asks for my loan number, is that an Investors number of SBA? To provide you with the best possible response to your question, we do recommend that you contact your PPP Loan Forgiveness Consultant. Where will we find our PPP loan number? Your Loan number can be found on your loan origination documents. Borrowers should work with their loan forgiveness consultants for any specific requests related to the original loan application. We have 170 employees; will all 170 employees have to be retyped into the forgiveness portal? As we continue to work through these different scenarios with our vendor, we will provide more clarity as to what to expect and the portal capabilities in the next series of communication. I do not know the lender number of Investors Bank Or the address to send the completed forgiveness request. Investors Bank is diligently working to have the application portal ready to start accepting forgiveness applications where borrowers will be able to complete the PPP forgiveness process and upload all supporting documents. Please continue to work with your Loan Forgiveness Consultant to evaluate your readiness to apply for forgiveness. If you need to identify your forgiveness consultant, please call: 855.422.6548 or email [email protected].


8/14/20

Covered Period Do we need to send a letter to Investors extending the 8 weeks to 24 weeks forgiveness? No. Borrowers are not required to contact Investors Bank about their decision to extend their covered period from 8 weeks to 24 weeks - the extension was automatic under law. Nonetheless, borrowers are eligible to apply as soon as they have fully utilized their loan proceeds towards eligible payroll and non-payroll items. You are encouraged to fill out the PPP Forgiveness questionnaire, which will allow us to better assist you and your business needs. Are there any advantages to using the 8-week period vs the 24-week period? There is no benefit to using an 8-week period over the 24-week period if you have used the funds as permitted under the Program other than you will be eligible for forgiveness sooner. Your loan is eligible for forgiveness once you have exhausted your loan funds. Must a borrower choose either the 8-week covered period or the 24-week covered period or can they choose something in between? Borrowers are required to choose either an 8-week covered period or a 24-week covered period. For those choosing the 24 weeks period, all are eligible to apply for forgiveness at any time within that 24-week covered period. For instance, if a borrower selected the 24-week covered period, they can begin the application process at week 16. Since the covered period now has been extended to 24 weeks, but the amount previously borrowed was calculated to cover payroll for 8 weeks, can a business now ask for a loan increase to cover the extra months. The PPP program does not allow for additional advances or amendments once a loan has been made. More importantly, even with the extension of the covered period to cover 24 weeks, the calculation of the maximum loan amount has not increased/changed. How does the covered period impact the rehire date deadline? The guidance states that borrowers must re-in state employees by either 12/31/2020 or the end of their covered period, whichever is earlier. The SBA guidance says expense paid or incurred during the covered period. The language in this slide doesn't seem to agree. Can you please clarify? "Covered Period” means the allowable period by which borrowers must use their loan proceeds, which has been extended from 8 weeks to 24 weeks from the loan disbursement date. Although, that period was extended from 8 weeks to 24 weeks, borrowers can elect to apply for forgiveness following the 8-week covered period if they have a complete application package with all necessary supporting evidence for payroll and nonpayroll costs.


8/14/20

Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid prior to the end of the covered period are eligible for forgiveness if paid on or before the next regular payroll date. An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the “Covered Period." How does the Alternative Payroll Covered Period work? Per SBA Guidance, For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the 24-week (168-day) period or for loans received before June 5, 2020 at the election of the borrower, the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date. For example, if the Borrower is using a 24-week Alternative Payroll Covered Period and received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, October 10. Borrowers that elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered Period wherever there is a reference in this application to “the Covered Period or the Alternative Payroll Covered Period.” However, Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period) wherever there is a reference in this application to “the Covered Period” only. In no event may the Alternative Payroll Covered Period extend beyond December 31, 2020. Is the EZ form applicable only to people who are using the 8-week forgiveness period? The EZ form can be used for either covered period (8-week or 24-week). One of the following provisions must be met by the borrower to qualify for the 3508EZ form. If none of these provisions is met, borrowers will need to complete the standard 3508 application. Please keep in mind, only one application is required. 3508EZ Form can be used if:

• The borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries within their application.

• The borrower did not reduce the annual salary or hourly wages of any employee by more than 25% during their covered period compared to January 1st, 2020 – March 31st, 2020 (or has subsequently returned salaries to the prior level by end of the covered period), and

• The borrower did not reduce the number of employees or the average paid hours of employees between January 1st, 2020 and the end of the covered period (or has subsequently re-hired prior to the end of the covered period).

• The borrower was unable to operate between February 15th, 2020 and the end of the covered period at the same level of business activity as before February 15th, 2020 due to compliance with requirements issued after March 1st, 2020.


8/14/20

If I decide to extend my covered period to 24 weeks, could I continue to pay myself $1,923/week? Forgiveness of loan amount associated with compensation to any one owner is limited to $15,385 using an 8-week or $20,833 using a 24-week covered period. Forgiveness related to paying employees is limited to $15,385 for an 8-week covered period but would be extended at the $1923/week rate up until the 24-week cap (a higher cap than owners). Owner maximum compensation: if you choose an 8-week period you are limited to the $15,385 and the 24-week limit is $20,833. How does that work if you choose a covered period between the 8-24-week period? Is it pro-rated in some way? Based on current guidance, borrowers have to use either the 8-week covered period or the 24-week covered period for forgiveness calculation purposes. Nonetheless, borrowers may elect to apply for forgiveness any time after the 8-week. For instance, a borrower applying at 12 weeks will be using a 24-week covered period. Final guidance is currently not released on how the weekly maximum payroll amount for owners will be calculated. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. If the 10 weeks period is used for forgiveness, should we use average FTE for the 10 weeks on the application? Borrowers may choose to use an 8-week covered period or a 24-week covered period. For those choosing the 24-week period, you are eligible to apply for forgiveness at any time within that 24-week covered period. Regardless of which covered period is selected, the average FTE during the covered period will need to be provided at the time of forgiveness application. In this scenario, the borrower will need to provide the average FTE during the 10-week period where it asks for average FTE during the covered period. I received the loan on 1st May For the calculation is it the expenses occurred from 1st May to 8 weeks only?" An eligible nonpayroll cost must be paid during the Covered Period (either 8 weeks or 24 weeks) or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Furthermore, for instances where part of the nonpayroll costs incurred prior to the beginning of the covered period but billed during the covered period, borrowers do not need to prorate.


8/14/20

Economic Injury Disaster Loan (EIDL)

Does the distribution of payroll need to fully align with the 8- or 24-week period? What is EIDL? Like PPP loans, EIDL loans are loans sponsored by the SBA to support small businesses facing economic injury due to COVID-19. EIDL loans differ from PPP loans as the maximum loan amount is capped at $150k and the terms of the EIDL loans differ from the terms of the PPP loans. Can you confirm that the EIDL advance will be deducted from the PPP Forgiveness? Does the EIDL and the PPP intersect in any way? If you receive an EIDL loan under the CARES Act you have the option to receive up to a $10,000 advance on funds (Sole Proprietorship is limited to $1,000 advance). This advance generally acts as a grant and will not have to be repaid. If you received an EIDL advance and a PPP Loan, your advance amount will be subtracted from your PPP loan forgiveness amount. To understand the impact, let’s take an example. If a borrower took a $10,000 advance on their EIDL, and has a $100,000 PPP loan, the maximum forgiveness amount that they will receive is $90,000. There is no additional impact to the PPP forgiveness process beyond this reduction. We received an EIDL Advance of $5,000 and a PPP Loan of $23,000. We are in the process of applying for an EIDL Loan. Can you please explain how the EIDL Advance will be treated as part of the forgiveness process? If you qualify for forgiveness, the $5,000 EIDL Advance will be removed from your approved forgiveness amount. For your example, if you qualified for 100% forgiveness, your final forgiveness amount would be $18,000, as it will be your PPP loan amount minus your EIDL advance ($23,000-$5,000 = $18,000). When can we apply for EIDL? Investors Bank does not process any EIDL loans. If you would like to apply for an EIDL please refer to the SBA's website.


8/14/20

Evidence

What documentation is required to show the loan was used for only payroll? What about if I do not use any third-party payroll provider? What is a PPP format from the payroll provider? Is it better to use copies of cancelled checks or copies of bank statements? In the absence of payroll reports, the following documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period should be provided: a. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees. b. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period: i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and ii. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. c. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount. d. If you checked only the second box on the checklist on page 1 of these instructions, the average number of full-time equivalent employees on payroll employed by the Borrower on January 1, 2020 and at the end of the Covered Period. If we are sole props, how would we show payroll evidence? I am not on a payroll as the owner of my business. I just have a yearly salary which is reflect on my yearly taxes. For sole proprietors or self-employed, you must submit supporting documentation to establish eligibility such as payroll processor records, payroll tax filings, Form 1099–MISC or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documents such as bank records, sufficient to demonstrate the qualifying payroll amount. We do not use a payroll service. Will there be a QuickBooks PPP template? Currently, Investors Bank does not have a payroll template for borrowers who do not use a payroll service provider. We will keep you informed of any changes, as applicable. For sole proprietors or self-employed, you must submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099–MISC, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount.


8/14/20

Will it be possible to provide required documentation by fax, regular mail or just drop-in to the branch? Investors Bank will be using an online portal for forgiveness applications and supporting documentation. All supporting documentation specific to your loan forgiveness application will need to be uploaded using this portal. For sole props who have not yet filed 2019 taxes, what documentation should be used to determine the appropriate annualized profit amount? For documentation, sole proprietors should provide any documentation that would support the 2019 tax filing, even if it hasn't been finalized yet. This would include any income statements or other accounting documentation. If you opened a separate bank account just for PPP funds, will it make it easier for loan forgiveness to be obtained? Using a separate account just for PPP purposes will potentially result to an easier review. However, this cannot determine eligibility or forgiveness application readiness. Borrowers are eligible to apply once they have fully utilized their loan proceeds towards eligible payroll and non-payroll items. You are encouraged to fill out the PPP Forgiveness questionnaire, which will allow us to better assist you and your business needs. Why do we need to retain application and forgiveness documents for a period of 6 years after the date of forgiveness or loan payment? Please note this is a mandate by the SBA and not by Investors Bank. Per the current guidance, "All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements. The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.” What proof can be used for "indirect and direct" COVID-19 issues? Will an owner certification be accepted? Appropriate documentation would include summaries of any local government orders that limited business operations, a brief memo summarizing the impact to your business, a copy of a loan deferral agreement, as examples. There is not currently any direct guidance on what would be expected as evidence.


8/14/20

I'm a sole proprietor and my only employee. I would like to understand what documentation I will need to provide. At a minimum, documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period of the Alternative Payroll Covered Period consisting of each of the following:

• Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees

• Documentation verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period

• Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.

• Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.

• Business Utility Payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments for electricity, gas, water, transportation, fuel and phone and internet access

We do recommend that you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation.


8/14/20

EZ Form Is the 3508EZ is filled out by Investors? No, the borrower will fill out their application within the provided Investors PPP application portal. More information will be released on how to use this portal soon. What is the difference between the 3508EZ and the 3508? The Form 3508 is the regular application expected to be used by most borrowers. If the borrower meets certain stipulations like those listed in question 88, they will be able to use the consolidated form. The following EZ Form highlights are:

• Simplified 1-page form, removing the FTE reduction line items • New borrower certifications related to forgiveness amount and use of funds, salary and

employee reduction, and potential hardship impacting ability to rehire • A reduced set of documents to be provided as evidence, focused on payroll costs and non-

payroll costs (removed FTE documentation) • Increased the list of documents for borrower to maintain (as applicable), including payroll

support justifying the borrower certification that employee levels / salaries were not reduced; payroll job offers and refusals supporting inability to rehire to pre-covered period levels; support for any certification to hardship brought on by COVID-19.

Will I be able to use the 3508EZ Form if I am self-employed? Based on current guidance, a borrower who is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries within their application is eligible to use the 3508EZ Form.


8/14/20

Forgiveness Amount Can we raise the amount of the loan if we made a new hire? No, but you can use PPP loan proceeds on the newly hired employee, If I have money left after 8 weeks, may I use it for additional payroll or non-payroll costs? You are not limited to using an 8-week covered period, as you have the option of the 24-week covered period. However, the funds can only be used for eligible payroll and non-payroll costs. For independent contractor/owner no other employees: Is the payroll cap 20,833 or is it limited to 60% of PPP loan amount? The PPP loan proceeds can be used for owner compensation replacement as well as employee payroll costs for employees whose principal place of residence is in the United States. A maximum of up to 24 weeks of net profit (determined from 2019 tax returns) may be forgiven for sole proprietors and cannot exceed an earnings rate of $100,000 annually. Forgiveness of loan amount associated with compensation to any one owner is limited to $15,385 using an 8-week or $20,833 using a 24-week covered period. Will there still be a calculation per employee to make sure each employee earned 75% of their Q1 salary? Or is the calculation based on an aggregate amount? All calculations are based on employee payroll, and payroll evidence should include a breakout listing each specific employee. Thus, any calculation would ultimately be based at the individual employee level. Additionally, any borrower certifying that they did not reduce salary by more than 25% would need to ensure they have appropriate evidence to back up that certification. Would safe harbor rules apply if you take 24 weeks and only 7 weeks were shut down weeks? To qualify for full forgiveness, employers must reinstate the number of FTE to the same level as February 15, 2020 by the time they apply for forgiveness and no later than December 31, 2020. In the application process, borrowers will need to list the number of employees at time of application for forgiveness, and that will be the primary data point used with respect to qualifications for any applicable safe harbors. Can we use all the funds for payroll only and exhaust the funds in the 24 weeks? Yes, borrowers can use the full loan proceeds towards eligible payroll expenses. You showed examples using the FTE test, but what about the salary reduction test? If the borrower has reduced any employee’s salaries or wages more than 25 percent, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period. Any reduction beyond 25% in salary levels will potentially impact the forgiveness amount, as defined by the calculations within the application form.


8/14/20

Full-time Employees (FTEs)

Our agency has a 35-hour work week. How do we handle that in computing FTE's? If your 35-hour work week has not changed from your reference period, there should be no change in FTE level and no reduction to the forgiveness amount. The SBA came out this week stating a company can apply for forgiveness prior to the end of the 24-week period but nothing specific to FTE. Will the SBA look at the FTE counts at the time of employment or December 31? Also, if a company runs out of funds after week 12 or 16, is the self-employed cap pro-rated or is anything over 8 weeks capped at the 20k? To qualify for full forgiveness, employers must reinstate the number of FTE to the same level as February 15, 2020 by the time they apply for forgiveness and no later than December 31, 2020. In the application process, borrowers will need to list the number of employees at time of application for forgiveness, and that will be the primary data point used with respect to qualifications for any applicable safe harbors. Forgiveness of loan amount associated with compensation to any one individual is limited to $15,385 using an 8-week or $20,833 using a 24-week covered period. The PPP loan proceeds can be used for owner compensation replacement (limited to $15,385 for 8-week or $20,833 for 24-week covered period, or 2.5 times average monthly net profits, if 2019 IRS Form 1040 Schedule C line 31 net profits are less than $100,000), as well as employee payroll costs for employees whose principal place of residence is in the United States, if the sole proprietorship has employees. Note that $15,385 is the maximum amount allowed for employees working within an 8-week covered period and $20,833 using a 24-week covered period. Final guidance is currently not released on how the weekly maximum payroll amount will be calculated. Hypothetical question: An employer applied and received PPP based on ~30 employees. They have re-hired about 5 at this juncture, with the intention to bring back most of the remainder by the end of the 24-week window. How much time will the remainder (or as many thereof as are re-hired) must be employed to count as part of the head-count to qualify for complete forgiveness? To qualify for full forgiveness, employers must use at least 60% of the loan proceeds towards eligible payroll costs. Furthermore, employees must reinstate the number of FTE to the same level as February 15, 2020 by the time they apply for forgiveness and no later than December 31, 2020, or the end of their covered period, whichever date is earlier. In the application process, borrowers will need to list the number of employees at time of application for forgiveness, and that will be the primary data point used with respect to qualifications for any applicable safe harbors. There is no specific guidance related to how long employees must be employed or the impact of their re-hiring to the forgiveness calculation. We do recommend that you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation.


8/14/20

We have a few employees who aren’t working as many hours because they are needed more at home for childcare purposes. They have been provided with the opportunity to work 40+; however, they are unable to. If other employees are working overtime hours, can those hours help fulfill the FTE count? An employee of the borrower voluntarily requests a reduced schedule during the Covered Period (an FTE reduction event), the borrower may count such employee at the same Full-Time Equivalency level before the FTE reduction event. Employers will need to document any circumstance where an employee makes the request to leave or reduce their number of hours. If I know I will spend 100% on payroll in 20 weeks, with no reduction in FTE and only a 10% reduction in salary for half that time, do I need to do anything until the end of the 20 weeks? When should I gather payroll reports etc.? Although the covered period chosen must be 8 weeks or 24 weeks, borrowers can apply for forgiveness any time within that 8 to 24-week period. For this example, you could apply at the 20-week mark. You will need to gather the appropriate documentation to serve as evidence for your forgiveness application and it should reflect the covered period you are applying for - 20 weeks in this case. Previous FTE comparison periods have previously identified (2019); are these no longer applicable? For the FTE count, it states that we must compare to Q1 of 2020, wasn't there also an option to compare to alternate periods? For purposes of this calculation, the reference period is, at the Borrower’s election, either (I) February 15, 2019 to June 30, 2019; (ii) January 1, 2020 to February 29, 2020; or (iii) in the case of seasonal employers, either of the preceding periods or any consecutive 12-week period between May 1, 2019 and September 15, 2019. For schools where the payroll contract ends in June...and payroll drops, headcount will go down as well, can the 40% of eligible nonpayroll costs offset that payroll drop? Seasonal employers have the option to use an alternative reference period against which, their number of FTE during the Covered Period will be compared. This alternative reference period may be any consecutive 12-week period between May 1, 2019 and September 15, 2019. Other than the choice of reference period, the same FTE calculations and requirements apply to seasonal employers as non-seasonal employers. Borrowers can spend up to 40% of their loan proceeds on eligible non-payroll expenses (mortgage interest, rent, utilities), as they see fit. What if employees were let go before pandemic in January or February but loan was based on 2019 payroll? To qualify for full forgiveness, employers must reinstate the number of FTE to the same level as February 15, 2020 by the time they apply for forgiveness and no later than December 31, 2020, or the end of their covered period, whichever date is earlier.


8/14/20

If a business was shut down through June, does one need to show 1099 compensation breakdown per safe harbor rules? If a business was required to shut down, appropriate documentation would need to be provided at the time of forgiveness application such as summaries of any local government orders that limited business operations, a brief memo summarizing the impact to your business, a copy of a loan deferral agreement, etc. There is not currently any direct guidance on what would be expected as evidence. As far as payroll documentation required for sole proprietors with no employees, refer to the sole proprietor section below. Does FTE include Part-time employees, or strictly full-time employees? Before the shutdown, we needed part-timers for 3 hours a week, but after the shutdown, we did not need them, so they worked 0 hours. What happens in a situation where you reduced staff by 1 full-time employee and hired 1-part time employee? Yes, FTE includes both full-time and part-time employees. FTE calculations regarding part-time and full-time employees are the following: Part-time employees are included in the calculation of Full Time Equivalent employees (FTE). For each employee, the average number of hours paid per week is divided by 40 and rounded to the nearest tenth. For example, a part-time employee working 32 hours per week would represent 0.8 FTE. The maximum for each employee is capped at 1.0. A simplified method may also be used which assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer than 40 hours per week. Payroll costs associated with part-time employees are included in payroll costs for PPP loan forgiveness calculations. To qualify for full forgiveness, employers must reinstate the number of FTE to the same level as February 15, 2020 by the time they apply for forgiveness and no later than December 31, 2020. In the application process, borrowers will need to list the number of employees at time of application for forgiveness, and that will be the primary data point used with respect to qualifications for any applicable safe harbors. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation." If employer elected to use 24 weeks, would the entire amount be forgiven? In that example, if the employer had extended the covered period and used all the PPP loan funds on eligible payroll and non-payroll expenses, and re-instated the employee whose hours were reduced, they would qualify for full forgiveness.


8/14/20

What if one of our employees died during the shutdown? We are down .5 on headcount. Is there an exception for that? The Paycheck Protection Flexibility Act expands the statutory exemption (safe harbor) for rehiring employees by allowing that forgiveness will not be affected by a reduction in employees if the borrower is able to document an inability to rehire individuals, to hire similarly qualified employees, or to return to the same level of business activity as it was operating at before February 15, 2020, due to compliance with COVID-19 requirements. Due to financial impact we had to close 1 of our 3 locations. Will that reduce our FTE amount requirement, so we can still get full forgiveness? We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. Are employees who are here on work authorization visa's considered residents? They are not US Citizens. The program includes employees whose principal place of residence is in the U.S. and does not indicate they need to be a U.S. citizen. Employees residing outside of the U.S., whether a citizen or not, should not be included in FTE or payroll costs. We do recommend that you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. If I have a reduced FTE count unrelated to COVID-19 but related to planned downsizing how do, we address this in counting or not counting that employee? Any reduction to employee count unrelated to the COVID-19 pandemic would need to be accounted for in the application process and would impact the total forgiveness amount. We had to pay our returning employees more than their pre-COVID-19 rates to match what they were making on unemployment. It was the only way to get them back to work. Our payroll actually went UP. Is that an issue? Salaries may be increased by the borrower. Any increases in salaries paid would be included in payroll costs for purposes of the forgiveness determination and could increase the amount of the loan forgiveness. It should be noted that compensation over an annualized salary of $100,000 paid to any individual employee during the Covered Period or Alternative Payroll Covered Period may not be forgiven. The maternity leave person isn't being paid by us, she is receiving Short term disability, at 2/3 pay. What do I do in this case? Eligible payroll costs would include employees who are paid by the borrower using PPP loan funds. For FTE accounting, a person taking any kind of leave can potentially be included as an employee as long as the borrower can document the situation appropriately. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation.


8/14/20

How are seasonal employees counted? Seasonal employers have the option to use an alternative reference period against which, their number of FTE during the Covered Period will be compared. This alternative reference period may be any consecutive 12-week period between May 1, 2019 and September 15, 2019. Other than the choice of reference period, the same FTE calculations and requirements apply to seasonal employers as non-seasonal employers. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. During the process I mistakenly counted part timers as full time FTE's, what do I do? We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. We have 2 employees that will be out for part of the forgiveness period due to maternity leave that is paid for by short-term disability insurance. Not sure how to account for this and am not sure how it impacts forgiveness. Paid parental leave does not affect the FTE requirements or loan forgiveness. For the forgiveness calculation, the employee on paid leave remains in the employee head count and the funds used for paid leave are included in the eligible payroll costs.


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Loan Forgiveness

How do we qualify to gain forgiveness for our PPP Loans? All borrowers are eligible to qualify for forgiveness, if they use the PPP loan funds in alignment with the requirements of the program. The Loan Forgiveness Application provides instructions regarding the calculations. Link to standard loan forgiveness application: https://www.sba.gov/sites/default/files/2020-06/PPP%20Loan%20Forgiveness%20Application%20%28Revised%206.16.2020%29.pdf Link to the EZ Form: https://content.sba.gov/sites/default/files/2020-06/PPP%20Forgiveness%20Application%203508EZ%20%28%20Revised%2006.16.2020%29.pdf If part of the forgiveness is denied for whatever reason, can I assume that there is the opportunity to re-submit supporting documentation? The PPP application portal will show the borrower the amount of forgiveness they are eligible for based on the inputs and documentation provided. If during our review of the application the forgiveness amount needs to be changed, the loan forgiveness consultant will communicate the situation with you accordingly. You will have the ability to provide updated documentation. In instances where the full loan amount is not forgiven by the SBA, borrowers will be able to appeal the decision within 30 days of receiving the notice of denial. Is there any reason not to use the loan proceeds for forgivable purposes until the funds are exhausted? Borrowers should use the PPP loan proceeds in alignment with the requirements of the program, on eligible payroll and non-payroll costs as needed for your business and in alignment with maintaining FTE. To reach 100% forgiveness, all the funds would need to have been spent on those eligible expense types and FTE would need to have been maintained (except if affected by COVID-19).


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Loan Terms

What is the term length of the unforgiven loan amount, originally it was 2 years I understand it is now 5 years? If it is now 5 years, how do I modify my note with the bank? If a PPP loan received an SBA loan number on or after June 5, 2020, the loan has a five-year maturity. If a PPP loan received an SBA loan number before June 5, 2020, the loan has a two-year maturity, unless the borrower and lender mutually agree to extend the term of the loan to five years. The promissory note for the PPP loan will state the term of the loan. Is the loan term start when the loan proceeds were deposited or the day I received an email notifying me that the funds will be available on my account? Borrowers have up to 24 weeks from the date of the loan disbursement to use the funds for payroll and other eligible costs. Concurrently, the loan term starts the date of the loan disbursement. Please provide information on conversion to loan if forgiveness is denied. Any amount of the loan that is not forgiven must be repaid after the SBA decision and within the Note terms, as agreed upon at origination.


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Non-Payroll Expenses

How does the PPP loan pertain to loans for university students? Student loans are not eligible for PPP Forgiveness as these are small business loans. If we have an operating company (Opco) that pays rent to a related company (PropCo) is that amount counted in the forgiveness? Would that be even if the rent amount is higher than market? This expense would potentially be eligible, if it was in agreement prior to February 15, 2020. Borrowers are advised to maintain documentation that will support their compliance with the requirements of the program. Maintaining access to the lease agreements will support compliance with the requirement that lease agreements must have been in effect before February 15, 2020. We do encourage you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. Loan drawdown was May 20 and 8 weeks end July 15. Would June 1 and July 1 rent payments be allowed to be applied in full? Yes. Eligible costs for utility and rent are those costs paid during the Covered Period (8- or 24-week) or incurred during the Covered Period and paid on or before the next regular billing cycle. Are property taxes eligible if you own your own building and if part of your rent payments? Property taxes are not included as a component of eligible non-payroll expenses. What portion if any of a copier and postage meter lease payment would qualify? To the degree this lease is related to maintaining business operations, it would potentially be included as an eligible non-payroll expense. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. Are auto loans and auto insurance considered a non-payroll expense? No, eligible nonpayroll costs do not account for auto insurance and auto loans. Only payments of interest (not including any prepayment or payment of principal) on any loan secured by business real property or business personal property incurred before February 15, 2020. This may include interest on lease for any equipment used for business such as vehicles, heavy machinery etc. in addition to the real estate. Further guidance is forthcoming. Non-payroll cost question: If we switch phone/internet providers within the covered period, can we still count those new utility provider payments towards forgiveness? If the new service started after February 15, 2020 but was in place before February 15, 2020 for a comparable amount, borrower may be able to count these costs towards eligible nonpayroll costs. We do recommend that you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation.


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If we used all the funds through payroll and rent, do we have to add documentation of our utilities? At the time of forgiveness application, if only payroll costs and rent expenses are included in the forgiveness calculation, only those supporting documentations will be required to provide at the time of the application. What if you paid for things hoping to get PPE approved, monies spent doing the shutdown? Expenditures on COVID-19 supplies are not included as eligible nonpayroll costs at this time, although it is possible additional guidance will be released in the future related to this topic. Are gasoline costs considered non-payroll? Are car leases, or car Insurance payments eligible for the non-payroll expenses? copier? The interest on an auto loan would be considered eligible. The other items do not appear to be eligible. Eligible utility expenses include business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 (“business utility payments”). We do recommend that you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. What is meant by Leases? Do lease payments on equipment qualify (Copy Machines, etc.)? Per the forgiveness application business rent or lease payments for real or personal property during the Covered Period or Alternative Payroll Covered Period, pursuant to lease agreements in force before February 15, 2020, are covered. We do recommend that you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation.


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Non-Profits For non-profit agencies, how do we separate out salaries that are federal funded by other government grants and those we are submitting for PPP loan forgiveness? No specific guidance has been released related to this specific scenario. It would be reasonable for the borrower to only include employees whose payroll was funded by the PPP loan for purposes of this application process. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. How do we document that our non-profit business was unable to run our program due to government shut down? We run youth development programs that typically run at schools and public parks Appropriate documentation would include summaries of any local government orders that limited business operations, a brief memo summarizing the impact to your business, a copy of a loan deferral agreement, as examples. There is not currently any direct guidance on what would be expected as evidence.


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Owners The owner of our company also owns another company. Both companies have applied and received PPP monies in separate loans. Can the owner be paid through the PPP loans for both companies as he receives paychecks from both companies? The companies have different tax ID numbers and are not relate. There is no explicit guidance stating that an owner of separate business cannot apply for separate PPP loans for each business. The applicable requirements for eligible expenses would apply to each individual loan. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. When I applied I didn’t add my compensation as owner, can I apply for another loan for myself? The PPP program does not allow for additional advances or amendment once a loan has been made. As far as applying for another loan, a borrower is unable to do so, under the current guidelines. If owner is not on W2 payroll but is LLC and withdraws money, can they use their own payout for forgiveness? Forgiveness of loan amount associated with compensation to any owner is limited to $15,385 using an 8-week or $20,833 using a 24-week covered period. That amount can be added to the payroll costs calculation and supporting documentation will be required at the time of forgiveness application. On Page 17 of the slides, owners are capped at $20,833. What is the definition of “owner”? We have shareholders of our S-Corp who are also w2 employees, they earn over $100k per year. None of them are more than 16% shareholders. Are they considered an owner for the cap purpose? Does the $20,833 cap for owners also include Partners in an LLP firm? The instructions to the PPP loan application state that the following are “owners”, and for forgiveness calculation purposes, the caps are to be accounted for, accordingly. "Owner" includes:

• For a sole proprietorship, the sole proprietor. • For a partnership, all general partners, and all limited partners owning 20% or more of the

equity of the partnership. • For a corporation, all owners of 20% or more of the corporation. • For limited liability companies, all members owning 20% or more of the company. • If the applicant is a trust, any trustor.

We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation.


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Are Employee that have shares in an S Corp considered owner or employee? Employees with 20% or more shares in a company are considered owners of the company and should be listed as such. For forgiveness calculation purposes, the caps are to be accounted for, accordingly. How is owner salary counted if it is paid outside of Payroll? How would corporation with one owner drawing a salary be handled if there are no other employees? What if there are 3 owners and those are all the employees, does that affect anything? Forgiveness of loan amount associated with compensation to any owner is limited to $15,385 using an 8-week or $20,833 using a 24-week covered period. That amount can be added to the payroll costs calculation and supporting documentation will be required at the time of forgiveness application.


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Payroll Expenses Are pre-paid health insurance costs eligible for PPP. Which are paid before the start of the 24-week period, but coverage is related to the 24 weeks? The amount of benefits incurred during the Covered Period may be included in the forgiveness calculation. The incurred costs must be paid during the period or paid on or before the next regular billing cycle immediately following the end of the period. If the payment at the next billing cycle occurs prior to when the request for forgiveness is submitted, it can be included in the eligible benefits costs. Can you use the loan 100% on payroll or does it have to be 60%? If I can use the full 100% on payroll, will that affect forgiveness? Yes, borrowers can use the full loan proceeds towards eligible payroll expenses. The forgiveness amount might be affected if FTE was not maintained and borrower does not meet safe harbor. Are employer contributions to retirement accounts considered as within the $100K per employee compensation cap or outside of that dollar limit? Can we include employer paid HRA and HSA contributions? SEP-IRA? The exclusion of compensation more than $100,000 annually applies only to cash compensation, not to non-cash benefits, including: • employer contributions to defined-benefit or defined-contribution retirement plans; • payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and • payment of state and local taxes assessed on compensation of employees. Are you able to issue bonuses and have them covered under the PPP forgiveness? Bonuses may be included in payroll costs to the extent that annual compensation does not exceed $100,000. Can I use PPP loan proceeds for payroll taxes? State and local taxes assessed on employee compensation and paid by the employers (e.g., state unemployment insurance tax) are included in payroll costs. Payroll costs however exclude federal employment taxes, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes. Federal and state income taxes required to be withheld from employee paychecks are not included in eligible payroll costs.


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Are workers compensation insurance costs eligible for forgiveness? No, current guidance excludes workers' compensation premiums from the definition of eligible payroll expenses. Does the employee salary cap of $15,384 increase for each week you use beyond the 8-week period? The employee (non-owner) cap would theoretically increase by the amount of $1,923/wk. ($100,000 / 52), for each eligible week that the employee (non-owner) was being paid during the covered period. The application I was sent says forgiveness amount is the smallest of lines 5,6 7. Line 7 say payroll costs 60% required to divide line 1 by .6. That makes no sense. that would be my smallest amount but if I have 75% to payroll why don't I get it. The form does not make sense. Current guidance only requires at least 60% of PPP Loan proceeds to be used towards qualifying payroll costs. Borrowers may spend more than 60% of loan proceeds on payroll costs if they choose. However, if less than 60% of the loan proceeds are used on payroll costs, the amount of loan forgiveness will be reduced. Per the current applications (standard and EZ), your forgiveness amount will be the lesser of the three amounts - your calculated total costs, the 60% payroll costs (negatively impact those who borrowers who have used less than 60% of the loan proceeds towards payroll costs) or loan amount. How will payroll report show weekly payroll if payroll is only processed once every month? Received PPP on 5/4/20. First payroll run was 5/31/20; second will be run 6/30/20...and so on? There is no requirement to show weekly payroll - a monthly payroll report would suffice. Are employer 401K and HSA contributions included? It is my understanding that they should be, but can you please confirm? Yes. Employer benefits costs include employer-paid amounts (including premiums) for medical, dental, life, short term disability, and long-term disability insurance. Employer-paid retirement benefits and employer contributions to health savings accounts are also includable. We do recommend that you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation.


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How do pension contributions for tax year 2019 but made during the covered period count toward payroll costs that may be eligible for forgiveness? All payroll and non-payroll expenses must occur within the covered period. Where pension contributions fit into one of the eligible categories below they would potentially be eligible. The following payroll costs are also included: a) Total amount paid by the Borrower for employer contributions for employee health insurance, including employer contributions to a self-insured, employer-sponsored group health plan, but excluding any pre-tax or after-tax contributions by employees. b) Total amount paid by the Borrower for employer contributions to employee retirement plans, excluding any pre-tax or after-tax contributions by employees. c) Total amount paid by the Borrower for employer state and local taxes assessed on employee compensation (e.g., state unemployment insurance tax); do not list any taxes withheld from employee earnings. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. If during the 8 weeks you used up all your loan because your employees worked overtime, is that overtime covered? For forgiveness calculations, employers may include overtime as part of payroll costs. Keep in mind, annualized compensation over the applicable Covered Period or Alternative Payroll Covered Period cannot exceed $100,000. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. If you have union employees, what benefits are considered payroll costs eligible for forgiveness? Payroll costs included those health benefit and retirement benefit costs paid by the employer. As such, union benefits that are specific to health and retirements benefits can be included in payroll costs calculations. Can we increase our employee number and use the PPP funds for payroll? Businesses can add employees to payroll during the Covered Period or Alternative Payroll Covered Period. Any payroll costs associated with added staff can be included in the businesses’ total payroll used for forgiveness calculation. Is there a cap for non-owner compensation? We have a few employees that will be over the $13,835 for the two months. Per the current guidance, $15,385 is the maximum amount allowed for owners and employees working within an 8-week covered period while the maximum payroll allowance for employees (non-owners) using the 24-week covered period is set at $46,154 (averaging~$1,923 per week).


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Presentation, Survey or Borrower Resource Center I have not received the questionnaire. I also do not know the consultant that has been assigned to us. Perhaps these emails went to the owner. Is there another way for me to obtain this information? Please email us at [email protected] with your name and entity that received the PPP loan and we will contact you. Where can I find a copy of this webinar? Will it be the resource center? The webinar slides along with a copy of the recording is available on the business resource center. The Investors Bank PPP Forgiveness Resource Center can be found using this link: https://www.myinvestorsbank.com/hereforyou/Relief_Programs/PPP_Loan_Forgiveness.


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Safe Harbor What if business conditions do not improve to where it was in 2019 period prior to pandemic & you cannot bring back all the people previously required? If you are unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31,2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19, you may be eligible to not have any reductions place on your forgiveness amount. You will need to document your hardship appropriately and prepare evidence to support your application and certification to that safe harbor. I can’t reopen until July 2nd due to restrictions. Does the safe harbor apply? Do I still have to provide the payroll information? The Paycheck Protection Flexibility Act expands the Safe Harbor for rehiring employees by allowing that forgiveness will not be affected by a reduction in employees if the borrower is able to document its inability to return to the same level of business activity as it was operating at before February 15, 2020, due to compliance with COVID-19 requirements. Additionally, borrowers have until the end of their covered period or December 31, 2020 to reinstate employee levels and salaries to qualify for full forgiveness. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. Since they closed all schools, do we qualify for a safe harbor since my company is a school? In addition, we are required to purchase supplies and equipment to comply with new opening regulations. Can these costs be used to qualify for forgiveness? The Paycheck Protection Flexibility Act expands the Safe Harbor for rehiring employees by allowing that forgiveness will not be affected by a reduction in employees if the borrower is able to document its inability to return to the same level of business activity as it was operating at before February 15, 2020, due to compliance with COVID-19 requirements. We do recommend that you consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. No direct guidance has been released related to the purchase of supplies and equipment to comply with new regulations, although it is possible additional guidance will be released on this topic.


8/14/20

Sole Proprietorships

You stated that sole proprietorships can apply to qualify for full forgiveness if we were unable to operate due to compliance with COVID-19 related requirements. Does this mean if we are able to provide payroll and non-payroll related expenses that total to the amount of our loan, we can be fully forgiven? If you meet the following safe harbor provisions listed from the SBA you are eligible to not have your forgiveness amount reduced. The safe harbor is listed here: ""The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000); AND The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19. Are you required to complete the EZ form AND the standard application form or choice of either? No, only one application is required. However, your loan forgiveness consultant will provide you the link to the portal when you are ready to start your forgiveness application. As such, borrowers won't have to fill out either one of the actual applications.


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Staffing What have been the recent changes to loan calculation guidance? What if your employee did not want to work anymore. They left because of whatever reason and I had to hire somebody else. The payroll amount was not reduced. Is that forgivable also Borrowers do not need to re-hire the same employees. As such, if the new employee's hours are similar to the previous employee's hours and FTE counts remained the same compared to February 15, 2020, this change will not affect forgiveness amount as long as the other program requirements are met. Let’s say I hired an employee on June 23rd, will I be able to use PPP loan proceeds to pay this employee if I receive the loan on May 1st? Yes, you can use loan proceeds for payroll for FTE that are hired after your loan disbursement date. What happens if an employee resigns or terminated during that period and the employer has yet to replace that employee? When an employee of the borrower is fired for cause, voluntarily resigns, or voluntarily requests a reduced schedule during the Covered Period (an FTE reduction event), the borrower may count such employee at the same Full-Time Equivalency level before the FTE reduction event. Employers will need to document any circumstance where an employee makes the request to leave or reduce their number of hours. The FTE Reduction Quotient calculation will need to be adjusted for these employee circumstances and documented. However, the Paycheck Protection Flexibility Act expands safe harbor to borrowers who are unable to hire qualified employees to meet the same level of FTE before February 15, 2020, due to compliance with COVID-19 requirements for as long as the said borrowers can provide evidence. If we stay within the 8-week covered period, what are our obligations for maintaining hiring levels after the conclusion of the 8 weeks? There has not been any concrete guidance on employee handling after the conclusion of the covered period. If you need to lay off people, wouldn't a shorter test period be beneficial? Borrowers must make their own business decisions. Businesses may reduce employee pay rates and/or hours, without effecting loan forgiveness, so long as the reduction is 25% or less of the average compensation for the previous quarter. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation.


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If an employee reduction results from the employee becoming pregnant post 3/31/2020 and not wanting to assume an in-office COVID-19 risk, does that necessitate "job offer and refusal" evidence? This situation would likely qualify for the job offer and refusal, all related to the COVID-19 pandemic. The borrower would need to maintain evidence of the situation, to support their certification if they choose to apply for the COVID-19 -related safe harbor. We do encourage you to consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. Do you have to re-hire the employee that was put on furlough or can you hire new? No, borrowers do not need to re-hire the same employees. Is the deadline to re-hire/bring an employee back to 100% FT June 30, 2020, or by end of year, if use the 24-week extended period? To potentially qualify for full forgiveness, employers must reinstate the number of FTE at the time of forgiveness application and no later than December 31, 2020.


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Taxes

If the loan is forgiven, would that amount be considered an income and be subject to income tax? Will loan forgiveness be considered in regard to taxes as a capital gain? No, the loan amount would not be considered as taxable income. But for tax planning purposes, any expenses used as a component of your total loan forgiveness amount will not be considered a deductible expense for your next tax filing, per the SBA’s guidance.


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Disclaimer

• As a Borrower under the Paycheck Protection Program, it is your responsibility to comply

with the requirements applicable to Borrowers under the Small Business Administration Paycheck Protection Program (SBA PPP).

• Investors Bank urges SBA PPP Borrowers to closely review the latest PPP requirements and guidelines (Guidelines) and discuss them with your legal, tax and/or accounting advisors. The Guidelines are available on the Small Business Administration and the Department of Treasury websites: www.SBA.gov and www.Treasury.gov. Investors Bank cautions you that the Guidelines are complex and continuing to evolve. The United States Treasury Department and the Small Business Administration periodically update the Guidelines. Some updates modify prior Guidelines, other updates provide further clarification.

• Investors Bank does not provide legal, tax, or accounting advice. Individual facts and circumstances vary from Borrower to Borrower which will impact any answers regarding any interpretation of questions. You should consult with your legal, tax, and accounting advisors to obtain advice regarding your specific situation. The information in this document is general and individual circumstances may vary. These materials and our other communications should be considered in connection with but are not intended to replace or serve as a substitute for, your close review of the Guidelines, and legal, tax or accounting advice from your advisors.

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