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PPP forgiveness - What will banks want?
Posted on 5/11/20 at 12:54 pm
Posted on 5/11/20 at 12:54 pm
sorry another long PPP thread...
small company with 8 employees, one business checking account at whitney that all income goes into and all payroll and bills gets paid out of. whitney did the PPP loan and deposited into this same account.
I plan to pay most of the loan out in payroll, probably about 85%-90% of it. the remaining for bills (obviously done in 8 weeks from day money hit my account)
we are still making some income, obviously no where what we were doing before the shutdown, cpa told me he thinks I should just keep depositing that money into the account like normal. he's not being very helpful to several of us who are constantly trying to get in touch with him since this shutdown occurred.
so at the end of 8 weeks is the bank just going to want a payroll report showing the amount in payroll paid out during that 8 weeks was at least 75% of loan? the remaining, I just turn in receipts of bills paids during the 8 weeks and just make sure it comes out close to what the loan total was?
small company with 8 employees, one business checking account at whitney that all income goes into and all payroll and bills gets paid out of. whitney did the PPP loan and deposited into this same account.
I plan to pay most of the loan out in payroll, probably about 85%-90% of it. the remaining for bills (obviously done in 8 weeks from day money hit my account)
we are still making some income, obviously no where what we were doing before the shutdown, cpa told me he thinks I should just keep depositing that money into the account like normal. he's not being very helpful to several of us who are constantly trying to get in touch with him since this shutdown occurred.
so at the end of 8 weeks is the bank just going to want a payroll report showing the amount in payroll paid out during that 8 weeks was at least 75% of loan? the remaining, I just turn in receipts of bills paids during the 8 weeks and just make sure it comes out close to what the loan total was?
6
Posted on 5/11/20 at 12:57 pm to coonasstiger
I was advised to open new account with proceeds from PPP, we did and draft payroll from that and the remaining will be eaten up with rent checks drawn on that account (75/25)
My bank has supplied me with a worksheet and asked that I submit it with payroll reports bi weekly to make sure we are on the right track
My bank has supplied me with a worksheet and asked that I submit it with payroll reports bi weekly to make sure we are on the right track
This post was edited on 5/11/20 at 12:57 pm
Posted on 5/11/20 at 2:02 pm to coonasstiger
This is what I received from my bank....
You are receiving this email because you have chosen to use our bank to obtain the Small Business Administration (SBA)’s Paycheck Protection Program (PPP) loan. Our incredible staff has worked hard to get these loans to you as quickly as possible; my sincere thanks to them for all of their efforts. We appreciated hearing from many of you with regard to our efforts—and for that I say “THANK YOU!“
We have worked in good faith with all of you and believe you have done the same. We also understand the program continues to evolve and new information continues to come to light, almost daily. We appreciate your continued patience as we navigate through this process to its completion. Now as we begin to turn our attention to the next phase, that of forgiveness, and given the latest guidance issued just this week from SBA (which is attached and available to all on their website with this link) there are four areas we feel are important enough to highlight at this time for you:
1. Taxable Treatment of Amounts Forgiven:
At the beginning of this process, just one month ago, SBA pointed out that any loan proceeds forgiven would not be treated as taxable income to the borrowers. What did not seem to be addressed until recently was that the expenses used to obtain the forgivable amount do not appear to be tax deductible. As we understand it, this is an IRS issue and we just want you to be aware of this potential ruling. As always you should seek the advice of a tax professional.
2. Not Able to Hire Employees Back form Added Unemployment Incentives:
Many of you have reported that you have not been able to rehire your employees, presumably because of the increased $600 per week incentive being offered with unemployment. This situation has caused some concern about the forgivable amount of your loan being reduced and the latest clarification from the SBA addresses this situation (specifically Question #40). It appears to require you to obtain and keep documentation with regards to your conversations between you and your employees. The good news is, it appears if you have this documentation, your forgivable amount will not be reduced as a result.
3. Possibility of Public Disclosure:
I’m guessing most of you have heard the stories about the LA Lakers, Ruth’s Chris, Shake Shack and others who appear to be in the public hot seat right now for their involvement in PPP. We want you to know we will not disclose the fact that you have received this loan or the amount of the loan you received; however, it remains highly likely that public scrutiny may compel SBA to publicly disclose all recipients names and amounts of PPP loans at some point in the future. Should this happen, please understand it will not be this Bank who discloses any information publicly.
4. Good Faith Certification Ends May 14th:
As stated above, we believe each and every one of you have certified in good faith that… “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” However, because “current economic uncertainty” is an ambiguous phrase, we feel compelled to direct you to questions 31, 37 and 39 of the SBA FAQs referenced above and attached.
The next step in this process appears to be the forgiveness phase and while there are not clear guidelines available to us yet, we expect that guidance in the coming days. We will obviously review that guidance and then develop our process and communicate our plan directly to you.
Again thank you for your patience and business and we look forward to serving you, open communication is best for all and we will continue to adhere to that standard.
You are receiving this email because you have chosen to use our bank to obtain the Small Business Administration (SBA)’s Paycheck Protection Program (PPP) loan. Our incredible staff has worked hard to get these loans to you as quickly as possible; my sincere thanks to them for all of their efforts. We appreciated hearing from many of you with regard to our efforts—and for that I say “THANK YOU!“
We have worked in good faith with all of you and believe you have done the same. We also understand the program continues to evolve and new information continues to come to light, almost daily. We appreciate your continued patience as we navigate through this process to its completion. Now as we begin to turn our attention to the next phase, that of forgiveness, and given the latest guidance issued just this week from SBA (which is attached and available to all on their website with this link) there are four areas we feel are important enough to highlight at this time for you:
1. Taxable Treatment of Amounts Forgiven:
At the beginning of this process, just one month ago, SBA pointed out that any loan proceeds forgiven would not be treated as taxable income to the borrowers. What did not seem to be addressed until recently was that the expenses used to obtain the forgivable amount do not appear to be tax deductible. As we understand it, this is an IRS issue and we just want you to be aware of this potential ruling. As always you should seek the advice of a tax professional.
2. Not Able to Hire Employees Back form Added Unemployment Incentives:
Many of you have reported that you have not been able to rehire your employees, presumably because of the increased $600 per week incentive being offered with unemployment. This situation has caused some concern about the forgivable amount of your loan being reduced and the latest clarification from the SBA addresses this situation (specifically Question #40). It appears to require you to obtain and keep documentation with regards to your conversations between you and your employees. The good news is, it appears if you have this documentation, your forgivable amount will not be reduced as a result.
3. Possibility of Public Disclosure:
I’m guessing most of you have heard the stories about the LA Lakers, Ruth’s Chris, Shake Shack and others who appear to be in the public hot seat right now for their involvement in PPP. We want you to know we will not disclose the fact that you have received this loan or the amount of the loan you received; however, it remains highly likely that public scrutiny may compel SBA to publicly disclose all recipients names and amounts of PPP loans at some point in the future. Should this happen, please understand it will not be this Bank who discloses any information publicly.
4. Good Faith Certification Ends May 14th:
As stated above, we believe each and every one of you have certified in good faith that… “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” However, because “current economic uncertainty” is an ambiguous phrase, we feel compelled to direct you to questions 31, 37 and 39 of the SBA FAQs referenced above and attached.
The next step in this process appears to be the forgiveness phase and while there are not clear guidelines available to us yet, we expect that guidance in the coming days. We will obviously review that guidance and then develop our process and communicate our plan directly to you.
Again thank you for your patience and business and we look forward to serving you, open communication is best for all and we will continue to adhere to that standard.
Posted on 5/11/20 at 2:54 pm to coonasstiger
Money if fungible, you will need to show that you spent at least 75% of that amount on payroll, and the remaining on eligible expenses.
So they will likely want proof, such as payroll reports from your provider (or your system if you do them yourself) and then perhaps proof of payment/invoices for the other stuff.
They will also want certifications regarding headcount - proof that you didn't reduce headcount (which should be obvious from payroll reports) and if you were unable to re-hire someone, written proof that you tried.
So they will likely want proof, such as payroll reports from your provider (or your system if you do them yourself) and then perhaps proof of payment/invoices for the other stuff.
They will also want certifications regarding headcount - proof that you didn't reduce headcount (which should be obvious from payroll reports) and if you were unable to re-hire someone, written proof that you tried.
Posted on 5/11/20 at 3:35 pm to coonasstiger
You need to track everything you spend out of your PPP funds including the source documents that support your spendings. The idea is that all of this can and will be audited at some point. Summarize your spending in excel, keep track of the corresponding source documentation and you'll be fine.
Posted on 5/11/20 at 11:28 pm to coonasstiger
I’m told banks won’t be responsible for the forgiveness and SBA will. And there’s no way they have the resources to audit every loan. That being said I wouldn’t try to take advantage of the PPP; separate bank account is definitely the safest move. But Ive been told loans under a certain amount ($1-2M?) will be forgiven and the loans over that threshold will be audited in some fashion. That would make sense to me.
Posted on 5/12/20 at 8:50 am to coonasstiger
quote:
What will banks want?
Banks will want what SBA wants, and the SBA doesn't know what it wants. Who the hell knows?
We have it in it's own account and submit a request to the bank with documentation. Bank approves draw and money hits our operating account. We cannot get money out of our PPP account without bank approval.
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