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Started By
Message
re: PPP Payroll Allocation
Posted on 4/22/20 at 3:04 pm to Spock
Posted on 4/22/20 at 3:04 pm to Spock
quote:
So anyone's salary that drops more then 25% will reduce the forgiveness amount.
They aren't going to penalize the company if John Smith doesn't return to work and John Doe takes his place provided the pay is within 25%.
If you pay John Smith $1000 per week and you pay John Doe $400 per week you are going to have some issues.
1
Posted on 4/22/20 at 3:28 pm to LSUFanHouston
What about if there has been a change in ownership and the former owner is now just an employee and has had his salary reduced and the new owner has had his salary increased?
Posted on 4/22/20 at 3:33 pm to tgrbaitn08
quote:
What about if there has been a change in ownership and the former owner is now just an employee and has had his salary reduced and the new owner has had his salary increased?
I imagine that when the regs come out, it's going to test based on the entire employee pool, or at most, groups of employees. (Maybe HCEs and everyone else).
So they would look at owner vs owner, and employee vs employee.
Posted on 4/22/20 at 3:34 pm to tgrbaitn08
Are both the owners paid W-2 wages? If so, in that situation assuming the owner with reduced salary is being reduced by more then 25% then it would decrease your forgiveness amount. Unless they made over $100k in 2019 - in that case you don't have to compare them for purposes of the loan forgiveness. But you can only have $8,333 per month paid and forgiven to them.
Posted on 4/22/20 at 3:37 pm to Spock
quote:
Are both the owners paid W-2 wages?
yes
quote:
Unless they made over $100k in 2019 -
They both made over $100k in 2019
This post was edited on 4/22/20 at 3:38 pm
Posted on 4/22/20 at 3:39 pm to tgrbaitn08
quote:
They both made over $100k in 2019
Then, according to the current rules, any reduction in their wages does not affect the forgiveness calculation. But forgiveness is only applicable to salary's paid up to $100k (annualized). So their full salary in the 8 week period won't be forgiven anyway.
Posted on 4/22/20 at 3:51 pm to lesgeaux
I’m in similar situation. My receptionist said she’s making more on unemployment than she would working with me and asked me if she can stay home until the $600 kicker expires and in the meantime I can “hire” my wife and pay her. Don’t know what I’m gonna do
ETA: needless to say I’m gonna fire her for being a lazy, system-abusing piece of crap
ETA: needless to say I’m gonna fire her for being a lazy, system-abusing piece of crap
This post was edited on 4/22/20 at 3:53 pm
Posted on 4/22/20 at 3:56 pm to Goodell Clown
quote:
I’m in similar situation. My receptionist said she’s making more on unemployment than she would working with me and asked me if she can stay home until the $600 kicker expires and in the meantime I can “hire” my wife and pay her. Don’t know what I’m gonna do
We have the same situation with a few of our employees. We've had pretty frank discussions with them that the unemployment pay is a temporary benefit and if they'd rather collect unemployment then they may or may not have a job after all this is over. We're paying people 75% to 100% of their pay for basically sitting at home all day. If that is not enough for them then it really shows that they're not the type of people we want to work with.
Posted on 4/22/20 at 3:59 pm to Spock
quote:
So their full salary in the 8 week period won't be forgiven anyway.
We aren’t paying full salaries right now only commissions. We’re using the PPP money we received for salaries
Posted on 4/22/20 at 5:04 pm to tgrbaitn08
quote:
I was told yesterday I had 8 weeks from the date you were funded
right you have 8 weeks to 'use' the funds, but you have until 6/30 to bring back FTE to the same level and/or bring wages back to 75% of what they were, for whatever time frame you are using for forgiveness comparison.
Posted on 4/22/20 at 5:20 pm to ValZacs
Does anyone know for sure how the timing of the payrolls play out? For instance, if you received funds today and you have a payroll on Friday that pays the previous 2 weeks of work, are the funds allowed to be used to pay the whole payroll (within the income limits) or only the days worked since the funds were received?
Posted on 4/22/20 at 5:44 pm to Goodell Clown
quote:
Goodell Clown
Hell.. Hire your wife, pay her the salary and profit
And in the meantime, fire that receptionist permanently because you don’t want that type of attitude in your work environment anyway and post a job opening on indeedPosted on 4/22/20 at 6:08 pm to NOSHAU
We just got funded too and will be counting this Friday’s payroll run towards it, and that is for the month. Pretty sure the only limit is 8 weeks, so whatever falls in that time frame counts.
Posted on 4/22/20 at 6:30 pm to lesgeaux
Watch the head count & FTEs.
An educated guess says these parameters will change. They just will not work for all industries like restaurants and bars. Now I would not bet on it, but I really think changes are coming.
An educated guess says these parameters will change. They just will not work for all industries like restaurants and bars. Now I would not bet on it, but I really think changes are coming.
Posted on 4/24/20 at 10:51 am to FunkyFreshFranklin
quote:
Hire your wife, pay her the salary and profit
This would be fraud though, no?
Posted on 4/24/20 at 10:58 am to Goodell Clown
Correct.
quote:
If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If one of your shareholders, members, or partners uses PPP funds for unauthorized purposes, SBA will have recourse against the shareholder, member, or partner for the unauthorized use.
Posted on 4/24/20 at 11:13 am to Goodell Clown
quote:
quote: Hire your wife, pay her the salary and profit This would be fraud though, no
If your receptionist is suggesting you hire your wife, I’m assuming then that your wife doesn’t work and is not collecting unemployment. There’s no law that says you can’t have your spouse As an employee so I don’t see any scenario in which hiring and paying your wife with PPP funds would not qualify as legal and be unforgivable. It would be like hiring anyone else for the position and paying them. But that’s just my interpretation
Posted on 4/24/20 at 11:17 am to FunkyFreshFranklin
It's a fair point. We're a family business. Most of our payroll is already family. Hiring your wife to man the phones because the receptionist quit seems acceptable to me.
What isn't acceptable is the poster several days ago that stated he was going to hire MULTIPLE family members to get them on the payroll and use the rest of the money to pay down the loan on a building. That would be fraudulent use of the funds.
What isn't acceptable is the poster several days ago that stated he was going to hire MULTIPLE family members to get them on the payroll and use the rest of the money to pay down the loan on a building. That would be fraudulent use of the funds.
Posted on 4/25/20 at 9:17 am to FunkyFreshFranklin
Anybody else get this email from Chase:
Assuming I may actually end up with a loan, what are we going to have to certify? That we had less than 8 weeks of payroll and rent in the bank? What about week 9, 10, etc. When do you certify it’s essential? And with future work remaining uncertain (but most certainly negatively impacted) does that factor in? Seems we’re entering an even grayer territory.
quote:
We continue to work hard to prepare as many applications as possible for processing when the SBA begins taking new applications.
However, the SBA recently issued new guidance that we want to communicate to customers whose application is in process as well as those who have already received funding. The new guidance strengthens some of the language regarding qualifications for a Paycheck Protection Program Loan. Specifically, we would like to remind you:
1. When you applied you certified that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
2. You have the opportunity to withdraw your application if you do not feel you meet this criteria.
3. If you’ve already been funded, and you believe you do not meet this criteria, you can repay your loan by May 7, 2020 and the SBA will treat that repayment as being in good faith.
If you cannot certify and want us to stop processing your application or you want to return your funding, you’ll need to follow the instructions at the bottom of this email.
Read the Important Information below before you make any decisions. Please be sure to read the FAQ shown below in its entirety and, if necessary, consult with your counsel or advisor:
31. Question: Do businesses owned by large companies with adequate sources of liquidity to support the business's ongoing operations qualify for a PPP loan?
Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that "current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.
Lenders may rely on a borrower's certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.
Please remember that you also certified you understood that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.
If you cannot certify and want us to stop processing your application or you want to return your funding, please email us at PPP.Cancellation@chase.com.If you’ve already received your funding, and you do not believe that your business meets the definition of “economic need”, you may repay it by May 7, 2020, and the SBA will deem your certification to have been made in good faith.
Assuming I may actually end up with a loan, what are we going to have to certify? That we had less than 8 weeks of payroll and rent in the bank? What about week 9, 10, etc. When do you certify it’s essential? And with future work remaining uncertain (but most certainly negatively impacted) does that factor in? Seems we’re entering an even grayer territory.
Posted on 4/25/20 at 11:53 am to TigerDeBaiter
SBA better stay out of trying to go back and turn this into something it was not. Congress made it very easy to get this loan as you just have to certify your business was effected. I don’t think SBA can come back now and start making up criteria for this. Who are they to say who was effected and who was not. If SBA just looked looked at my operating account, it would look like I did not need a PPP loan as I had plenty of $$ to make payroll. However, that is only because I haven’t paid all of last years taxes yet and loaned my business 50k. Also I am an attorney and generally just wait until the end of the year to bill several insurance companies that I do work for but I had to go ahead and bill them now to keep revenue coming in while things are slow. So while my revenue may not look down compared to last year, I i will take a big hit later in the year. Just too many variables for SBA to start coming back now and trying to check to see who was “effected” and who was not in their judgement.
This post was edited on 4/25/20 at 11:56 am
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