COVID-19 CARES Act & FFCRA: What Insurance Agents Need to Know

Good afternoon, everybody. This is Mike O'Cannon with Club Capital. I hope everyone's having a good day. We are looking to get started right away if we can. So what we are hoping to do today, first of all, is to go over really the CARES Act and FF CRA. So FF CRA, we're going to go over kind of what all of these mean, so both Families First as well as the Coronavirus Coronavirus Response Act, and really as it focuses and highlights to agency owners. So Club Capital being focused 100% on agency owners across the country, we want to make sure that everybody has up-to-date information on what you specifically need to know. So there's going to be things from emergency paid sick leave and emergency family medical leave of absence. So the reason why we're doing this today, first of all, is a lot of stuff has been coming out over the past couple of weeks in response to COVID-19 and kind of what is our new normal right now. And there are some things specifically that go into some legislation that goes into effect tomorrow, April 1st, for small businesses. So we want to make sure One, you know what it is. Two, you know how to talk to your employees about it. And then three, the logistics of that. Sometimes it's, it's good to know what's going on, but sometimes the logistics are hard to actually understand. How do I actually put this in place? So from paid leave, that could be, you know, how do I actually do this in my payroll platform? So we want to make sure that we cover some of the nuts and bolts of that today. And then what What we as CPA and advisor are for all of our clients are certainly getting a ton of inquiries about the small business stimulus surrounding loan disaster relief programs and things that are available to you. Are they— first of all, do insurance agency owners actually comply with being one of those that can take advantage? Of this, are you eligible for it, are there grants that can help you help relieve some of the principal portion or the entire portion for you. Really the nuts and bolts of all of this we hope to be able to cover today. So that being said, I am joined by John Sutton, who is the Club Capital Accounting Manager. You can see on your screen there, as well as Chris Ferretti, who's the Club Capital customer success manager and full payroll guru in-house. And so for everybody, for everybody that works with us, we will be talking— some of the logistics will be specific to the payroll partner that we utilize, which is Gusto. If you do not use that platform, some of the— we have a couple screenshots, obviously that won't be applicable to you. But there are likely some things that other payroll platforms are looking for or looking to implement very quickly to be able to help everybody stay compliant with this. That being said, just some 101 items on the webinar. The recording and all of the slides that we have will be provided afterwards to everybody that's here today, as well as put on our social media page. So everybody will get it— be getting an email with links to this. And then questions— everybody's going to be muted throughout the entire presentation today, but really encourage you to use the chat feature within Zoom. And we will— there's a couple points, two primary sections that we're going to cover today, and there's going to be questions after each that we're going to go through. So Some of the team today will help moderate those questions, and we'll make sure to get to them as much as we can during the allotted time today. We hope to not take the whole hour for you, hope to be able to cover everything here in questions, but it is a good amount of stuff to cover today, and definitely a good amount of content specific to agency owners that you need to know. A quick disclaimer, as, as we all need to have. The information provided here— and I'm just going to read this specifically— information provided here does not, is not intended to constitute legal advice. Instead, all information is for general information, informational purposes only. Each individual's circumstances and situations are unique, so it is important to speak with either an experienced attorney or your CPA individually to discuss any claims questions, concerns you may have related to the subject matter discussed today and in the document. This is incredibly important. It's what we talk to a lot of our clients on in relation to tax advice in general. There's, there's a ton and a wealth of great knowledge recommendations out there, but a lot of things are individual and specific to your specific situation. So regardless of everything that's here today, I just want to make sure that, that if you have specific questions, you're asking, you know, your CPA or us if we are your CPA specifically for your case so that we can help individually in that specific situation, make sure you're getting sound advice and right steps specific to you. So the agenda for today, two primary things that we're going to be going over, two pieces of legislation that have happened in the past couple of weeks. So one is the Families First Coronavirus Response Act. This is in regards to emergency paid sick leave and the emergency family medical leave of absence. So How do you know what policy to use? How do you implement it? What are they? How do you talk to your employees about it? Chris is going to be able to cover all of that for us, and a lot of this goes into effect tomorrow. And then the second is the CARES Act. So this is the Coronavirus Aid, Relief, and Economic Security Act that the president put into— I believe signed into law this past Friday and has definitely circulated the media for the past couple of weeks. So two big things within this that we're going to talk about today, and I guess another just caveat disclaimer for everybody, there's a ton in this, in this bill. And we're— what we're going to do today is talk specifically about how this can impact small business owners and how this impacts really the agency owners that we work with. There's a ton on the personal side that we're not necessarily going to cover. We're going to— we'll be able to highlight and send some links out of some other highlights within the bill, but specifically for today, we want to talk about some of the loan programs that are there for small business to help in this time. As well as some of the grant initiatives that are there as well. So paycheck, the two big things really to look at here are the Paycheck Protection Program and then the Small Business Association's Economic Injury Disaster Loan. So they've made some kind of updates to that in this timeframe that everyone needs really to know about. And there's, you know, a lot of people are talking about certain grants. Or like a $10,000 grant, people are asking a lot about that. That's specific to one of these programs. So we're going to give some guidance and really some clarity into what's the difference between the two types. And then from our perspective, in terms of all of our clients, what is probably the one that fits you the best and which one really should you probably look to move forward with. And then the biggest thing is what are next steps here? Hey, if this— these are the things that we need to be able to do, and that we can, can have for our business. What do we do from here? So we want to make sure that we cover that. With that being said, I will pass this over now to, to Chris Ferretti to get us started on the Families First Coronavirus Response Act. Chris.

Good afternoon, everybody, and thank you so much, Micah, for the great introduction. Once again, I'm going to be covering, going over the Families First Coronavirus Response Act. What exactly it covers and how you can implement it to your business. So starting out right now, what is the Family First Coronavirus Act? So, so number one, this was enacted on March 18th, 2020, and it requires certain employers to provide their employees with paid sick leave and expanded family and medical leave paid for specific for specific reasons related to COVID-19. And in the next slide, we're going to go ahead and get started into, like, giving you the breakdown of emergency paid sick leave and family medical leave pay as well. So emergency paid sick leave, this is going to be effective tomorrow, and it applies to all private employers with fewer than 500 employees. Employees, regardless of how long they've been employed with you. Even if somebody was just hired last week, they are available for this right now. Next slide. And it's, it's important for you to know the qualifications for the employees so that you know how to pay them out. So I'm gonna go over it in this slide. And just to let you guys know, an employee is entitled to to take leave related to COVID-19 if the employee is unable to physically come into your office or telework because— and once again, pay close attention to the type of reason because it will affect how you actually pay them out. So the first 3 are related to themselves. So if they themselves are subject to a federal, state, or local isolation/quarantine order, such as a shelter-in-place order, If they are advised by a healthcare provider to self-quarantine and if they are experiencing symptoms and are seeking medical care. Once again, that's all related to themselves. Regarding caring for others, if they are caring for a family member who is under a federal, state, local order or recommendation by a healthcare provider to quarantine/isolate, If they are caring for a child whose, whose school or place of care has been closed due to COVID-19, and if they are experiencing any other substantially similar condition specified by the Secretary of Health and Human Services. Those are all reasons for the employee to be able to participate in the EPSL. So earlier I mentioned how It's important to distinguish the reasons because each reason carries a percentage of pay that you actually give to the employee. So for the reasons that are related to themselves, they are entitled to 100% of the regular wages up to $511 per day for up to 80 hours. So essentially, that would be a total of $5,110 per employee for full-time employees. Or the average number of hours worked for over, for over a 2-week period for a part-time employee. Now regarding employees that are caring for others, they are entitled to 2/3 of their regular wages up to $200 per day. Same thing for up to 80 hours, and this cannot be any more than $2,000 per employee for full-time employees, or the average of hours worked over a 2-week period for a part-time employee. Just to let you know, employees who make more than the limits, you as the employer— I'm sorry, employees who make more than the limit, you as the employer can pay them more than what you're seeing right here. However, when you receive the tax credit, you will only receive a tax credit based on the caps that you're seeing right here. And I'll go over the tax credit in the following slides. So if the employee takes emergency pay, um, paid leave, employers can receive a tax credit up to the capped amounts that I listed previously. The credit will be applied to an employer's Social Security taxes. This reduces your overall Social Security tax bill that, like, that you pay every quarter. If you're a client of ours, Gusto, number one, will be keeping track of the hours that you are paying for either EPSL or FMLA, and they, and they will be making the necessary arrangements to make sure that, that you receive the tax credit. If you're not a client of ours or you are not using Gusto, then I'm sure that your that your payroll provider will be doing something similar. Let's say that you paid— let's say that you paid your employees more than what you actually owe in your Social Security tax bill. The Social Security basically will give you a tax credit for whatever it is that they have accrued so far, and then anything that's still basically owed to you, the IRS will refund that to you after the quarter ends. And we can move on to the next slide. Now, so that's, that's EPSL. Now, like, now we're like, now we're going to move on to emergency paid— emergency family medical leave of absence, also known as FMLA. Once again, this also goes into effect tomorrow, April 1st of 2020. And this amendment is— this is basically an amendment to the existing FMLA regulations to help employees during COVID-19. This applies to all private employees with less than 500 employees. Employers are required to provide up to 12 weeks of of protected— of job-protected emergency FMLA leave for employees. And businesses with less than 50 employees actually may be exempted by the Department of Labor for these requirements if the DOL determines that it would jeopardize your business. We can provide you with more information on that later or just send you some information about it after the webinar. Just so you know, the emergency FMLA can be used by employees who are unable to work or telework similar to the EPSL, because of the fact that they need to care for a child under 18 because the, because the kid's school closes or their place of care closes as well. Now, regarding how the employees are going to be paid, and in which one of your employees qualified. So any employee that has been with you for longer than 30 days qualifies for this. Regarding how they're going to be paid, the first 10 working days taken off are completely unpaid. Now, if, if they have a PTO bank or a sick bank with you, depending on your PTO/SICK policy, then they can use like whatever they have accrued, to pay for these days. And after the first 10 days, the employers must pay two-thirds of the normal rate up to a maximum of $200 per day. And the total lump sum of, of, of all of this cannot be more than $10,000. For employees with varying work hours, take the average number of hours that they were scheduled to work in the 6 months prior to their leave And if they're a recent hire, like if you hire them 31 days ago, for example, then whatever you thought, like a reasonable number of hours that you thought you would have normally given them, then they must be paid 2/3 of that. Once again, similar to the EPSL, employees who make more than the maximum amounts listed above can be paid their full wages if you as the employer chooses to do that. However, you will only receive a tax credit for the listed amounts right here. So let's move on to the next slide. Now, regarding job protection, this is once again a point that's addressed in the FMLA. This leave is indeed job protected. The employees are generally, generally entitled to return to their, to their same or equivalent position. For employers with less than 25 employees, you might be exempt from this requirement if you can show that this position no longer exists due to the economic conditions caused by COVID-19, and that you actually took reasonable measures and efforts to basically restore the position for the employee. In the case of an insurance agency, most likely the positions will be available for the employees when they come back to work. So this basically applies to all of our clients. Now, regarding the employer tax credit for the FMLA, let's go ahead and go over that. Once again, your business can receive a tax credit for the wages that you pay, up to $200 per day for the employee and a total of $10,000 per employee over the course of the pandemic. And right now, like, like, the scope of that is from April 1st till December 31st of 2020. In any given quarter, the maximum amount that can be refunded by the Social Security per employee is $2,000. And once again, this is going to be refunded to you by the Social Security. Gusto will be handling this for our clients in the event that they're, you know, a Gusto client. If not, your payroll provider should be handling this as well. So now that we basically have introduced two policies, the EPSL and the FMLA, how do you know which one to use? I actually created a chart that, like, that's going to give you a breakdown in just a sec. And once again, this is not one or the other. Employees can actually use both of these. They are, they are entitled to both of them, as a matter of fact. To give you a recap, for the EPSL, there is no qualification, meaning that it— like, meaning that if you just hire somebody yesterday, they are available for the EPSL. There's no waiting period. And once again, they get paid 100% of their pay, up to $511 per day, up to 80 hours, aka 10 days, if they're taking care of themselves. And if they are caring for others, then that's two-thirds of their pay for 80 hours, aka typically that's 10 days. And once again, as you can see at the bottom, 100% of the, like, of the regular wages for self and two-thirds of the wages for caring for others. With the emergency family may— I'm sorry, for the emergency FMLA, the employee has to have been with you for 30 days. The first 10 days are unpaid, although they can use any banked PTO or sick leave, or they can simply use the EPSL. As a matter of fact, they can be out as, as much as 12 weeks, and you will pay them for two-thirds of their regular wages, up to $200 per day. You will be refunded up to $2,000 per quarter, and the total amount cannot be more than $10,000. So we can move on to the next slide. Regarding implementing this in Gusto, just so you guys know, it's very important that you are keeping track of the hours and the type of, uh, and the type of leave that the employees are taking, because that's how you're going to be able to prove to the Social Security Administration, and that's how you will receive your tax credit. Once again, our clients use Gusto, so I'm going to show you very quickly how, how they can implement that. When you are running payroll in Gusto, run payroll as if it's a regular payroll. And then, as our clients know, the second screen asks you, asks you if your employees have taken either PTO or sick time off. There's going to be something that, that pops up at the top that asks you if your employees have taken any, any emergency leave. You would basically click that button and then it's going to ask you which employee it was and what type of leave they took. And by you doing that, it's going to keep track of all the hours for you, and then it'll be able to report to the Social Security Administration so that you can receive your tax credit. So it's very hands-off, you know, for you, which is really good. And once again, if you're not using a system like this, it's very— it's, I mean, it's how you get the actual tax credit. So you have to be keeping track of the hours with as much detail as you can. What questions do we have so far? And maybe John can read them off to me, or Yeah, so I'll jump in.

We've got some questions we've received already. If you have any questions, just continue submitting them in the chat. We'll try to answer your questions. The first question, this might have been sent in before you covered this, Chris, but it's for the emergency paid sick leave. Is this for both full and part-time staff?

Yes, it's for—

yep.

So for part-time people, you simply get the average number of hours that they work, and then you apply either the self-pay or the or the two-thirds pay, depending on the reason as to why they're out.

Okay, we did have sort of a question and statement. This is something common that I've seen someone send in: if I lay off staff before April 1st, that disqualifies them from receiving the benefits. I did want to chime in and comment to this, just to let employers know that because you do receive this payroll tax credit, you should be made whole dollar for dollar for these benefits. So after receiving that payroll tax credit, you're not going to be out of pocket for offering these benefits. The next question we've got: What's the best way to document time off for the government?

Great question. Simply keep track of it in Gusto if you are using Gusto. Then keep track of it in Gusto.

I do know that the government is also going to release some additional guidelines to let people know what you're supposed to be keeping track of. Depending on the reason why the employee is taking leave, there may be— a doctor's note may be appropriate or a statement from the school showing that the school was closed during that period of time. The next question is about hardships for small businesses under 50 employees. Is there a hardship exemption that would allow you to not offer these types of benefits?

Yes, there are hardship exemptions, and we can send you, we can send you like information on that later, just because it's, it's very detailed and it's almost very specific to the type of employee that you are. So yes, if this is going to put your business at risk of actually shutting down, then you can be exempt from this, from the FMLA, that is. From the EPSL, no.

So the next question, any payments made through payroll prior to April 1st, these situations do not qualify for the tax credit. Is that correct? Correct. Do you have some additional questions here? I'm just going through the chat. So the question, to be clear, they have to actually be sick to claim this, correct? Not just in a position where they're taking care of a child who is healthy.

Um, so that would qualify for two-thirds pay or FMLA, then. And they themselves don't have to be sick if they are taking care of their child because of the fact that their school closed or the place of care closed, then they do qualify for, for EPSL and for FMLA.

So we have a question. Should employers request medical records from their employees to document the reason for leave?

So this is a bit of a gray area right now. Generally speaking, if coronavirus wasn't happening, yes, you know, you would want to you know, like request some sort of a doctor's note. But right now the CDC is basically recommending that you don't because they don't want sick people, ironically enough, to actually go to the doctor's office for the simple sake of getting a doctor's note because that's putting the physician at risk of getting sick. So some things like a like a telehealth doctor's notice can suffice. It's completely at your discretion. But basically, yeah, it's totally up to you. Like the CDC basically says don't do it because then you're putting more physicians at risk. But once again, completely up to you.

The next question, if they are capable, employees are capable of working remotely. Can they still claim this benefit?

No, because they're working remotely. Employees can't— employees cannot, cannot claim this if they're working. Like, this is meant to be for people who are actually unable to work, whether it's coming to the office or unable to work from home.

The next question: extra 80 hours I believe, is that in addition to their normal PTO time off?

Yes. So if they have accrued, if they have accrued any, any banked PTO, then that's like, that's completely separate from this. So this would be on top of their sick time off and PTO that they have banked already.

Chris, this is Micah. Just one that I saw here that I think is very applicable to, uh, to everybody on the phone, um, uh, with a ton of sales employees. So when we're talking about, uh, the salaries that when we think about two-thirds pay or 100% pay, when we're looking at this, is it the base pay or base plus commission when looking at 100% versus two-thirds?

I don't know the answer off the top of my head, but I can look into that. I can look into that and certainly let our clients know. So I'll put up— I'll put a—

John, John, do you have guidance on that? Is it because— is it the average over the past number of, like, a certain time period?

Sorry, I was reading through questions. Could you ask that again?

Yeah, so the question was— so a lot of people have sales employees that are base plus commission. So when looking at the requirements to pay 100% versus two-thirds, either or, what is that basing 100% or two-thirds off of, which of their pay, or is it looking at a specific time period?

Yeah, it's a good question. I think I would need to look at the details to give an inaccurate answer to that. Okay, so the employee would—

yeah, go ahead—

expect to receive for working that period of time. So that may mean that you need to include commissions, but hopefully employees can continue to work remotely and still work.

Right, so we'll make sure to get to the bottom of that question. I think it's very applicable, so we'll make sure to send that out in the follow-up email to this, some clarification on that.

Yep, that's a really good question. Any other questions that come to mind?

We do have a good number of questions, and just reading through to find some that haven't been answered.

So, John, as you're going through this, and maybe just to look at some of these, you know, I think a lot of these are some very— a lot of the questions coming in now are very, you know, individual-specific cases, you know, that are going to be, I think, one-off to be able to review if certain situations, certain employees, certain situations are are, you know, presenting themselves of saying, I'm, you know, I was available, but now there's, there appear to be options, and I want to take, take those options. I think this is going to be evolving in terms of the actual rollout for, for some of that and whether someone can, can simply opt to not work when they are fully capable of working and using this. So I think some specific guidance, or maybe a one-on-one guidance for some of that might be necessary there, you know, if people are kind of changing their minds after seeing some of the legislation. So we'll have to see, I think, on a case-by-case basis on, on some of that. John, any other questions to run through, or should we jump into the next topic here?

We do have a good question about If you have an employee that needs to take time off, if they're caring for a child, but they're also able to work remotely and basically juggle those two requirements, you know, are they able to receive some portion of benefits for time they're caring for a child?

I would just like to reiterate that this only applies for people who are completely unable to work. So if they are completely unable to come into the office and completely unable to telework, then this applies to you. If they are able to work from home, this does not apply to them.

I, I can add to that that the Department of Labor put out some frequently asked questions, and one of the situations there, you know, was if someone is teleworking and also taking care of a child. In that example, they did say that Basically, the employee could receive benefits for a portion of their time. Basically, if they were able to work a portion, then they would just receive their regular pay for those hours. And then during that same day— this only applies, again, if they're telecommuting and they need to take care of a child for a remaining portion of that day— then they can qualify for these benefits.

All right, great. Well, I think we'll move on to, uh, on to the next section here. I think what everyone can see is that there is, uh, this is pretty fluid and changing almost daily, but we do want to be able to get the most up-to-date information out to everybody. There's going to be a ton of questions on this. Our team is here for you to help navigate this situation between us and our partners at Gusto, making sure that, that you get the right guidance on what to do and how to track it. If you have any questions on actually tracking this or implementing this in upcoming payrolls, certainly reach out to the team on this. We are going to dive into Section 2 now for the webinar today where we really look at the Coronavirus Aid, Relief, and Economic Security Act, the CARES Act. Act, which really dives into the financing options that are available to small businesses during this time. So, a quick overview here in the two primary parts of this act that we're going to cover today that relate to the small business financing options. Again, just passed this past Friday, or just put into law this past Friday. The two items that we're going to cover here in this order are the expansion of the SBA's Economic Injury Disaster Loan Program, and this is providing an additional $10 billion in funding due to COVID-19-related hardships. The SBA during this period is able to approve loans based solely on credit score or alternative appropriate methods, really from the spirit of expedient financing options. And then this is— this one, just to be clear in putting this differentiation in here, this is provided directly from the SBA. And then the second aspect of this that a lot of people have heard about is the introduction of the Paycheck Protection Program. So this new program sets aside $350 billion in government-backed loans, and it's modeled after the existing SBA 7(a) loan program, but this is actually being offered in partnership with financial institutions. So outside of the direct SBA, but with other financial institutions. So if we just compare this immediately, the expansion of the SBA EIDL program is an additional $10 billion in funding, whereas the Paycheck Protection Program, which I think a lot of people have been hearing a lot about but not knowing maybe it was called the Paycheck Protection Program, $350 billion in government-backed loans for small businesses. So second bullet here, offering forgivable loans, forgivable loans up to $10 million per company to help maintain payroll during the emergency. We're going to cover that specifically. What does that mean? And then offers loan— loans for small businesses with fewer than 500 employees, certainly applicable here. And again, this is being done in government-backed loans in partnership with financial institutions. So the first one just to cover here is the expansion of the Economic Injury Disaster Loan Program through the SBA. So the changes here, these are a type of SBA loans that are out there today, now being made available to individuals operating as sole proprietors or independent contractors. So specifically applicable to insurance agency owners and can be approved by the SBA solely on credit score. So this is something kind of immediately available to you here with them, a max of 3.75% interest. EIDLs are smaller— excuse me— so the loans that are smaller than $200,000 can be approved without a personal guarantee. A borrower no longer needs to be in business for at least 1 year to qualify for the loan. So for a lot of new agency owners out there, this could be applicable to you. And then I think one of the big ones, uh, they got them circulating around that a lot of people have been talking about, um, is hearing that borrowers can receive a $10,000 emergency grant cash advance that can be forgiven if spent on paid leave, maintaining payroll, increased costs. So this, this emergency $10,000 grant, um, should you meet the terms of a loan It's supposed to be paid out within 3 days. It's a part of the overall loan. It would just be $10,000 of which could be forgiven should you meet those requirements. The part here to show is that you do meet the requirements of not being able to pay certain business obligations due to revenue loss. So you do need to be able to show that. So From our standpoint, from Club Capital's standpoint, in terms of the impact to insurance agency owners across the country is that, you know, this is probably not going to be the most applicable for our client base. You know, when we think of the myriad of other small businesses across the country and their impact of closing doors, not being able to work from home, a lot of retail-type businesses. That is, I think, primarily the businesses that are going to be able to take advantage of this SBA loan opportunity here. So the Paycheck Protection Loan is likely going to be one that is going to be more applicable. Again, individual cases may vary. It could, you know, if this is happening to you specifically within your market, It's definitely something to consider and we can help you walk through that process as well. So now looking at— so that was the expansion of the current SBA program. Now we're going to talk about the introduction of the Paycheck Protection Program. So the, the Paycheck Protection Program creates an emergency loan that can be forgiven when used to maintain payroll through June. So looking at, at really 2 months of forgivable emergency loan, so payroll through June, and expands the network beyond SBA. So this is going to other financial institutions that more banks, credit unions, and lenders can issue those loans. So they will be federal-backed, but they'll be through other financial institutions. So those could be, you know, some of your larger lenders, Wells Fargo, M&T, and some of your smaller financial institutions as well. So the purpose here is to incentivize small businesses to not lay off workers during this incredibly hard time in the economy and to rehire laid-off workers that lost jobs due to some of the disruptions of the past maybe couple of weeks or month. Before this legislation got put in place. So that's the purpose behind this, especially looking at, you know, the underlying here is to incentivize small businesses to not lay off workers and to come out of this strong. So what type of businesses are eligible? Really, the one that we, you know, need to focus on the most here is small businesses with fewer than 500 employees. This is for, you know, for all small business owners here. And when we look at the specifics here, you know, how big of a loan can I get? What are the terms of this? What are the specifics here? Let's walk through this. So the maximum loan amount, $10 million. The amount to be guaranteed is 2.5 times average monthly payroll costs for the 1-year period. Before the loan is made. So we look at the last— on average, we look at the payroll over the last 12 months prior to the loan and take an average for that. So payroll costs here are defined as the sum of all payments for compensation, wage, cash tips, paid time off, severance, commission would be in there, healthcare benefits, state or local taxes. Does not include the employer payroll taxes, but the employee taxes. And then a specific caveat here is individual compensation. So if this was, you know, team member or even owner, right, if you're on payroll, individual compensation over $100,000 cannot be used in the calculation. So you would use the max up to $100,000, but anything over $100,000 for an individual employee would not be applicable. For the calculation. Interest rates on this are capped at— on the Payroll Protection Program are capped at 4%. Some other benefits here, there's no personal guarantee or collateral required for the loan. There's no annual guaranteed fees by the lender, and all lenders are expected to defer— I believe there are some additional some initial application fees, but any fees, principal, and interest are expected— none are expected for no less than 6 months and no more than a year. So this does give a little bit of flexibility to the individual financial institutions. So with all that being said, can these be forgiven? What I think a lot of people are focusing on. The answer to that is Yes, with limitations and provisions to that. So small businesses that take out these loans can get some or all of their loans actually forgiven. It turns into a grant. So as long as employers are maintaining payroll— maintain, excuse me, maintain paying the employees at normal levels, so looking prior to April 1st and looking and being able to maintain that payroll during the 8 weeks following the origination of the loan, then the amount they spend on payroll costs can be forgiven. So again, the exclusion of those, uh, in terms of the calculation of payroll over $100,000, if they happen to be on payroll, that will not be there. What can also go into the loan forgiveness is amounts for mortgage interest, rent payments, and utility payments. Combined for the period of that 8 weeks. And so right now we believe the, the upper limit, total upper limit of this loan forgiveness appears to be 2.5 times monthly payroll costs. So we're looking at 8 weeks, so it's— we're looking at 8 weeks forgiveness of payroll, but total, if you include mortgage interest, rent, or utilities, It looks like the upper limit of this is 2.5x monthly payroll costs. So I think due to the nature of these loans, specifically in comparison to the expansion of EIDL, you know, we at Club Capital feel that these loans will probably apply most to insurance agency owners, certainly that we work with. So quick question here before we get into, before we get into questions to wrap up the hour. Can a business receive both the EIDL and a Paycheck Protection Program loan? So the answer is yes. Small businesses can get both an EIDL as well as a Paycheck Protection Program as long as they don't pay for the same expenses. So working with your accountant, I think we can work specifically on what that means, working with the lender as well to be able to verify that. I think the bottom line here too is that you need to make sure you have accurate financials and everything is as up to date as possible to make sure that you're in a good place, one, to be able to apply should you want to, and two, to be able to prove anything down the line. So, you know, I think, I think that's probably what my next point was here. And then can you apply for these now? So what's the next step on this? For the SBA Economic Injury Disaster Relief Loan, the EIDL, yes, you can, and we'll provide this out. These are available right now. And for the Payroll Protection Program loans, that are through other financial institutions? Not yet. So this just came out, just signed into law on Friday. Banking institutions do not have enough information on this yet. That being said, there is some guidance being given in terms of types of things that you can start to have in place for this. Talking to your banking institution about being a business that might want to participate in this and start getting at least some of the conversation going. But right now there is no actual application into this. But I think starting to get some of the, some of the necessary items in order first will definitely, will definitely help. So an example of that is financials and looking in especially prior year tax return. If we need to have this year's tax return, you know, done immediately now, or if you're not working with us, we need to maybe get the financials in order as soon as we can. So questions? I think I've seen a ton coming through the chat feed already. And John, maybe if you'll join me here. And be able to go over some of the questions here. What do we got?

Yes, the first question that I've taken down, we've got a new, new agent that recently opened doors January 1st in this instance, and he's wondering, you know, since he doesn't have a long history with the business for payroll expenses, would he still be able to take advantage of these loans, these SBA loans?

So, and correct me if I'm wrong here, John, and we'll give our best guidance on this for that person. You do not need to have a year's worth of payroll history, but you, but I believe you can, if you do not, if you're a new business and do not have that, you can look at the prior months leading up to, leading up to the initiation of the loan or the loan application.

Yeah, that sounds correct to me. There are dates that the SBA has said that the business does need to be in existence before these dates, but January 1st is before the dates that I've seen. We've got a question about what banks are offering the Paycheck Protection Loan now. I guess you did sort of answer that already, Mike, but if you want to recap.

Sorry, can you say that one again?

Yeah, what banks are offering the payroll protection loans now?

Yeah, I can't say that it's going to be all of them, but it's going to be a large host of participating financial institutions. So think about your large banks. I know that will be participating. Some of the banks that we do business with— M&T, PNC, Wells Fargo— some of the larger institutions are certainly— you can find information on their websites about this now. I know we are going to be for our clients too. I think one of the good recommendations is to probably talk to your current banker about the opportunities here because working— I think a good opportunity would be to work with your current bank on this. I know one of the things Club Capital is going to do is, you know, try and see how much we can help in the application process here. So we will probably be working with a couple of banks on our side and be able to help with application process for our clients as well as soon as that application guidance is provided. But I would reach out if you're wondering which specific banks it is. I'd primarily, the first thing I would do is go on your bank's website. Guarantee if they're doing something with it, it's on their website today. And so I'd probably start there.

Next question. For the Paycheck Protection Loans, one of the requirements is that the employer has to basically keep up payroll expenses. And if the employer does need to let employees go and payroll expenses, you know, dip below the 25% threshold and it reduces the amount of forgiveness, There is an exception where if the employer hires back employees at the end of a— at the end of the period. And so the question is, you know, what is the date that the employer would be required to hire back employees in order to still get the full benefit of the loan forgiveness? And I can chime in that I've read that it's if you hire them back before June 1st, that you would still get qualified for the full amount of the loan forgiveness.

Correct, yes. So these, uh, keep in mind the loans are certainly, uh, are, are longer-term loans, but they're— I think we're speaking specifically to right now for this question, speaking specifically to, uh, to the grant portion of the loan, um, to which would be an 8-week period. So if you're asking, you know, for a loan that only equals that 8 or I think 2.5 times payroll amount, then that is all that would— that you'd be able to get forgiveness for 100% of the loan. But certainly people could be asking for much more than just the 8-week portion.

We've got a question about the recording of the presentation. When will this be available, or will it be available?

This will be available. We will be trying to put this online as soon as we can later today and send this out to everybody, both the presentation as well as the material itself. And I did leave a couple clarifying questions that we want to make sure we do some due diligence on and put it in the email out to everybody later.

We've got a question about the payroll paycheck protection loans. Um, so is the maximum amount you can apply for limited to 2.5 times your average monthly payroll?

Uh, it is not. That is the, the forgiveness portion, uh, um, that could be turned into, into a grant but is not, uh, based upon that. John, you want to talk about maybe identifying the loan, loan value amount.

Yes, so there are still your typical SBA loans that are available, you know, up to $10 million. And the criteria to apply for these payroll protection loans is more relaxed than the previous requirements were, and at least 2.5 times the payroll can be, you know, guaranteed. You're pretty much close to guaranteed to receive that amount of the loan, even if you don't qualify to receive amounts beyond that. Specifically about amounts that qualify for the loan forgiveness, is that what your question was, Micah?

Yeah, I mean, I think some of this is getting outside of, uh, well, I think it's just more business of how much how much should we be determining we need? And I think that's going to be a case-by-case basis of, you know, how much do you need a loan amount. At the end of the day, these, you know, outside of just the forgiveness period of the loan, these will be typical business loans. That being said, at a, at a very low interest rate, I think the max is, is 4% for the Payroll Protection Program. So good opportunity in just in terms of getting a loan for the business should you need it. I think we'd want to work more on an individual basis to understand what, what you would need the loan for long term if it was not just something immediate payroll related due to the pandemic that we're in.

Right, yeah, I agree. And because they've reduced fees and reduced costs, it makes sense for owners to apply for these loans. If it turns out that you have more than you need, you can repay the loan so that you're not paying, you know, interest on the outstanding balance that you don't need.

That's actually a really good point. In terms of, in terms of prepayment or paying off the loan earlier, there are no penalties for prepayment, which sometimes, sometimes there are. For some of these loans. So you can ask possibly for more, more than you need for the time being, and then be able to pay that off down the road. Keep in mind some of the approval process here will be based upon financials in terms of total amount that you can apply for.

We've got a question: Is Club Capital or Gusto able to help owners determine their average monthly salary expenses or the 2.5 times that figure.

Absolutely, yeah. So, the Club Capital is here to help for all of that. Write to your account manager, write to support@club.capital, and we are happy to help with this. We are looking at being able to help significantly on just the loan application process in general, outside of just the individual items needed. But we are definitely there to be able to help pull some of these reports within the payroll platform and get you the information that you need there. And then we'll probably be taking a step further once we find out a little bit more about the requirements of these. We want to be able to put together a process, you know, if there's going to be, you know, hundreds of and thousands of agents that are wanting to to look into this? How can we help streamline that a little bit? So yeah, more to come. And I'll actually just show here, just in terms of next steps this week, we are going to be putting together another webinar. I'm not sure if it's going to be this week. This is going to be the first of a couple of webinars on this topic. Once we find out a little bit more, we'll be letting you know ASAP. And we'll set up a webinar probably within a day's notice once there's more guidance on this, and we'll be able to give a little bit more information there. Anything else, John? I know we're right at the top of the hour. I know there's a ton of questions that have come in. We're trying— we tried to get to probably as many of them as we can. Zoom saves all the questions here, so I think what we'll do in our, in the email out is put maybe an FAQ from today in, into that email that goes out to everybody to make sure that we cover as much as possible. And then again, our team is here for questions, so reach out support@clubdecapital.com. We'll try and get, try and get to you as soon as we can. As you can imagine, outside of it being typical tax season, even though the deadline now has moved a bit, this is quite a busy time for us and our team, but we are committed to getting back to you as soon as we can. So one more plug before we leave today. So we'll be announcing another webinar as soon as we find out more information. The second piece too, there will be a separate webinar from the coaching side. Of the business, led by our Director of Coaching, Bradley Hamner, on leadership now that we are all in this virtual setting. So that will be coming out too, so you can look for that. But I want to thank everybody for joining today. I want to thank our entire team for putting together some amazing content in a quick amount of time and getting this out to you. So I appreciate it, and more to hear from us later in the week. Bye, everybody.