Updates on PPP Loan Forgiveness Guidelines

All right. I can see everybody filtering in one by one right now. Happy Wednesday to everybody. I hope everybody is staying, staying safe with you, your families, your agencies, all your team members. Luckily, I've been able to chat with a large number of you, a large number of our clients, non-clients that we've been helping on that. Payroll Protection Program loans. It's been good to be able to chat with everybody and see how they're doing. So today we are primarily going to be giving updates from our last webinar. Last webinar was done on May 1st, so about 2 weeks, 2 weeks later now. Obviously guidelines are changing pretty rapidly and daily, so we just want to be able to give some updates. We got some great questions from the first webinar webinar as well. Some questions that were asked during the webinar, some follow-up. We've been having a ton of Payroll Protection Program strategy sessions with a lot of you, and so we've been able to kind of sift through a lot of those questions, look at the main ones, the main themes, and we want to be able to get that back to everybody now so that everybody feels comfortable with things. There are some really— there's some good news on some of this, especially around sole proprietors and how to utilize net earnings. I think that was a big one from last time. We work with a lot of businesses that are sole proprietors, and net earnings was a big aspect of what went into the calculation of the loan. And so now we need to look at how it goes into the forgiveness aspect of this. So we've got some great updates there. So just for the agenda today, again, this is me. I'll be the presenter today. So Mike Buchanan, one of the partners of Club Capital. We're going to do just a quick recap in case we have anybody that was not on last, last, on our last webinar. So just do a quick Payroll Protection Program recap of kind of where we stand on the forgiveness side, what eligibility looks like. What's the timeline? What are the triggers that can reduce your forgiveness amount? And then we'll do some updates and FAQs from the May 1st webinar and any Q&A. So we are using the Q&A feature with Zoom webinar today, so you can place your questions in there. Devin, our Director of Business Development, is on the line today and will be sifting through those, and we'll try and get to those at the end of the call today. So just a quick disclaimer that, you know, everything we go over today is meant for informational purposes and it's what we know at this point in time from what we're seeing across the SBA guidance, AICPA, and other news outlets that we're able to have access to. Things are changing rapidly, so something might change tomorrow that we go over today. That's possible. If that happens, we try and get some guidance out to everybody either in an email or we'll post a blog about it or we'll get back on and do another webinar. So no legal advice here. We are pointing people towards certain legal contacts if they need it, whether that be an employment attorney or someone that can help draft up leases. We're finding that some people are in some informal leases. So we'll talk about some of that today as well. So just looking at the timeline for the Payroll Protection Program, and again, just to do a quick recap, so it's an 8-week period to track expenses, eligible expenses, and that date starts on the date that you were funded, right? So if you were given a $40,000 loan, the date that it was made available to you to utilize is the day that that starts, that the clock starts for you. So we want to make sure that we know that, that we can utilize that to say when is your end date. And so it's going to be 8 weeks from then, literal timing of 56 days, to be able to look at that and understand what the costs incurred to the business were during those 8-week— during that 8-week period. What we're also finding is that Different payroll vendors, especially the one that, that we use, called CapitalGusto, they have a— under the reports section— a Payroll Protection Program Forgiveness report that allows you to put in your total loan amount as well as the date that you were funded and generate a report. And you can continue to generate this report every day. Generally, you'll want to do this after each payroll that you run, but it will keep track of the main things, at least that Gusto is aware of. From the payroll side of the house so that you know where you stand on eligible payroll costs towards your loan, any reduction headcount, and any reduction in compensation for employees. So some of those we'll get to in a bit, but great to see that, that Gusto and some other payroll vendors out there are staying on top of this as, as much as possible and, you know, making actual developmental changes in their product for you to stay on top of it. The timeline. So the second piece of the timeline here is how to submit for forgiveness. So luckily there is a bit, unlike the initial run-up to the loan origination where it was just a race to who could get to the bank the quickest, there is going to be a 90-day period to work with your bank to apply for loan forgiveness. And so this starts the day after your 8-week period for expense tracking ends, and then you have 90 days to be able to apply. So we'll go through today kind of what does that look like, what type of documentation do you need, and then we're in the midst of putting together just a good one-pager for everybody that we'll make available on our website, send out in an email of just what do you need to know kind of one-pager-wise to make sure that you feel comfortable in collecting all the documents that you need. One quick item on where to manage the loan. We've been receiving a lot of questions on, should I keep it at the bank that I got this, should I bring it into my operating account? The recommendation from our side is just to bring it into your operating account, the entire value of the loan. All of the supporting documentation that goes into loan forgiveness is really, you know, how you're going to be able to apply for the forgiveness factor. It doesn't really matter where the funds are. We just need to— what we would do is just the easiest way is to bring it into your operating account. There's no need to sync up payroll to a separate account at all. I would just bring this over. Some banks, from what I'm hearing outside of some of the banks that we've worked— that we directly worked with, some are very small and don't have the ability to even do some transfers. That being said, I would just grab some checks, have them and just write a check for the full amount over into your operating account. So the management of the loan, calculating forgiveness is all going to be done with documentation purposes and payroll reports, financial reports, not going to be done, you know, with the bank statement. So I would just bring it over into your operating account. So your forgiveness amount may be reduced. So 4 triggers here. So the funds have to be spent. First of all, on eligible expenses. So those general expenses, and we'll go through this more, are going to be on payroll-related items, rent, utilities, and mortgage interest. So if you got a $40,000 loan and you're not going to spend $40,000 on those eligible expenses, then you're not going to have $40,000 be able to be reduced. So it starts with spending it, and then it's how you spend it. So the percentage of salaries to operating costs has to be 75% on payroll, 25% on some of the operating costs that are there. Employee headcount. So this could reduce your loan forgiveness if you— there's a couple base periods and we'll go over this, but if your headcount goes down comparative to your base period, then percentage-wise it will go down by that. So if you had 4 employees, you went down to 3, Your forgiveness could be reduced by 25%. So there's obviously some strategies there on if that's the case, what are we going to do? Are we going to look to hire? Are we going to look to hire back? That could be something that we need to do. And then compensation levels. So compensation levels, they really are looking at this not overall for the entire, the entire payroll for the agency. But they're actually looking line by line at individual employees to say, did individual employee compensation get reduced during the 8-week period compared to quarter 1? So it's interesting in all of these, every, every single trigger kind of has a different period that you're looking at. So employee headcount can be kind of a choice of 2 different periods, where compensation levels is looked at as Q1 2020. So a number of different things obviously to look at. So again, the eligible expenses for forgiveness, these are the expenses that we are worried about, that we need to be talking about for this 8-week period, and that we need to be able to substantiate with supporting documentation. So we have payroll expenses up to $100,000 per employee. Obviously, the documentation here is going to be directly from your payroll provider. For all of our clients, that would be Gusto. Rent, we're going to have agreements. So anything that was put into place prior to 2/15. So any agreements entered into prior to 2/15. And then the same thing with utilities and mortgage, mortgage interest. So anything that was entered into prior to 2/15. So this is one of the questions that we got a bit that we'll dive into later, but, you know, we're seeing that a number of people might have somewhat informal leases, maybe with family members or things like that, that will need to get some supporting documentation for. So that can definitely be a next step for some people to make sure that they have some supporting documentation for their lease. So that was a quick recap. We can dive into some more of that one-on-one with everybody should, should everybody want to kind of meet outside of this. But let's dive into some frequently asked questions from last webinar. So as a sole proprietor, how do we bring in net earnings during the 8-week period? We'll dive into this. What qualifies as a full-time employee? Where did the number of employees on my application come from? Is that my base period? I'm getting a lot of questions because based on that initial form that went in, it was called the Application Form 2483 that went into your bank. That had a number on there for full-time employees. So a lot of people saying, where did that number even come from? That's not my headcount right now. What do I look at, right? So we'll dive into that. And then we've got a couple other just kind of miscellaneous ones that we put, just kind of some quick hitters. That we'll dive into as well. So the very big one here on sole proprietors, really big opportunity here for sole proprietors, really on anybody that is a Schedule C filer. So this could be for sole proprietors or LLCs that are not filing as an S corp. So if you're an LLC that does not file as an S corp, it's called a disregarded entity. You're filing actually as a Schedule C. As well. So for either of those situations, it's going to be what's called owner compensation replacement. So in addition to payroll, the same way we utilize this, utilize net earnings to calculate the value of the loan, we can use that exact same number as part of the payroll figures to look at payroll forgiveness. So an example there, you know, if we used $5,000 a month was the average net earnings based upon your Schedule C of 2019, we're automatically able to use that $5,000 per month as owner compensation replacement to go into the calculation of payroll forgiveness during this 8 weeks. So we would— it's really meant to be direct compensation replacement for sole proprietors. You know, in essence, this is your payroll, right? You're not normally on payroll.

This is you.

This is your payroll. And so we're able to use that for this 8-week period. So specifically, and especially for really everybody that we work with that is a sole proprietor, if you're a sole proprietor or Schedule C filer, you also have employees. So we're able to use that owner compensation replacement amount, which is the net earnings. So say that $5,000 in my example times 2, so $10,000 for the month, plus your eligible payroll expenses during that 8-week period as well. So we're able to use both to calculate for forgiveness amount. So this is big because obviously a lot of people are saying, you know, okay, I'm not built into payroll and my net earnings are likely going to go down during this 8-week period with revenue falling. What are we going to do? Okay, so this is directly to combat that. The legislation obviously thought about this. It's meant for direct compensation replacement for Schedule C filers. So what qualifies as a full-time employee? I think our guidance before, when we think about full-time employee, was looking at 40 hours. After doing some, some review of the SBA guidelines as well as with the AICPA, AICPA, which is, you know, really the think tank and think tank body of the accounting world who the SBA works with directly. First, what we're seeing is that the CARES Act does not specifically design— or excuse me, define how to calculate an FTE. So what the AICPA guidance is, is to utilize the definition of a full-time employee that's under the Affordable Care Act, which is 30 hours per week. So this definitely helps. We have a lot of people that have slightly less than 40-hour week employees. We're also seeing a lot of people that are doing reduced work weeks during, during this time because so many people are working from home, but they're not really able to put in the 40 hours a week. And so bringing this average down to, if you look at the total pool of hours and dividing by 30 instead of dividing it by 40, This is definitely helping people to keep their FTE headcount high during this period. So next question here, what is the base period of my employee headcount? So going against kind of the initial number on the, on the application, that 2,483, that number that went into the loan application was really to show eligibility for being able to apply for the Payroll Protection Program loan. If you remember, this was— the Payroll Protection Program was specifically for businesses, small businesses that had employees under 500, under 500 employees. And so really on the loan application, it was a look back. We used typically Gusto for most of our clients to look at the employee count for 2019, or if they were a newer business, during the first 2 months of this year. That is just to look at, you know, really, were you a qualifying business under 500 employees? So we got it. Everything's good from there. Now we don't need to worry about that number anymore. We need to now worry about the time— the time period that we're given to calculate employee headcount for the forgiveness side. And so you have two options here, and you can use actually whichever one is more favorable to the business. So we can either use February 15, 2019, to June 30, 2019, and you look at the average full-time equivalent employees you had during that period, or you can look at January 1, 2020, to February 29, 2020, so the first two months of this year. And so either one— so in essence, what you're going to want to see is during those periods, at what point did you have fewer employees? And so maybe they show the exact same number, but maybe one is less than the other. And really, that's the one you're going to want to use as your base period, because you're going to want to show that you have the same or more full-time equivalents during the next 8-week period than you did in your base period. So we're going to want to use one of the two here. So new and existing businesses can utilize either one. You just have to have employees for both time periods. So example is we have a lot of sort of clients that maybe just started their agency last June. So they started on June 1st, which is in the first payroll period to choose from base period, but they didn't have employees the whole time. So we wouldn't be using that. The only option for that would be to use the January to February of this year. All right. So then some miscellaneous questions here, and we'll just fire through these. So do I have to hire someone back that has left my office or that I already terminated? The quick answer is no. You're not forced into doing anything here. There's nothing that, that, you know, goes outside of guidelines or you're breaking any rules. You do not have to do this. That being said, it could be at risk for a headcount issue. So we really just need to be able to look at what your base period is for headcount, compare what you're likely going to have during the 8-week period, and then it's possible, you know, to hire someone else or to hire back that employee. So there's options there, but you're not being forced into doing anything that you don't want to do. Is the biggest thing to, I think, get across. So what if my office lease is informal with a family member? So we do see this quite a bit, but having an official lease agreement for your business is definitely recommended and something that we always push for. You should have something in writing, even if it's with you. So sometimes there's, you know, you own the business, but you own it personally, have an LLC, but then you, your agency pays rent to your LLC. You still need to have something in writing that shows what you are charging one company versus the other. Even though you own both companies, they still need to have formal agreements between the two, especially to show, you know, is this a triple net lease? Who pays for what? Because when it comes to taxes, You really want to know that at the end of the year. Where should we be allocating expenses? Is it on the LLC side for the property, or is it on the agency side? So what we would recommend is to work with an attorney or try and find a good template for this online. And maybe our team can maybe point at— point people in the right direction should they have any questions. But you should get a formal lease agreement in place. And you can backdate it, so it is okay to backdate some of these agreements to when they originally went into place. So totally fine to do that if you don't have one now. You know, you can put it in place because it's easy to show substantiating documents that there was a payment in place for a certain amount of time. But definitely would be good to have this, have it executed, because we would like to use this for supporting documentation either when we're submitting your application or when you're submitting your application for forgiveness. So the next question, as a sole proprietor, should I put myself on payroll for the 8 weeks? So quick answer there, no, no need to do this. We went over the sole proprietor rules for owner compensation replacement, so no need to do this, especially this shouldn't even go into the equation for loan forgiveness for Schedule C filers. So no need to do that there. And then, should I put my spouse on payroll to increase payroll figures? So our recommendation here is just going to fall in lines of hiring a new employee, right? You can hire whoever you want to hire should they be, you know, providing services for your agency, right? So you can hire them if they happen to be a spouse. Great. So not a problem there at all. You can definitely add your spouse to payroll. Typically, we don't see this, you know, necessary, you know, to bring extra money into the household because it all comes into the same tax return. But if there is something to do during this time, if you're hiring somebody else to— based upon services that they are able to provide, then not a problem. So we'll get to some more questions in just a bit, but just a couple strategies here on how to maximize loan forgiveness. So on a number of the calls I've been on with clients lately, you know, we're sometimes getting a little bit short of what the payroll numbers are, right? It was, it was really easy to calculate what the total loan amount was. And now we're actually trying to look at some of the actual expenses to actually substantiate 100% of the loan being forgiven. And so we're looking at this and saying, okay, maybe there's ways to increase commission for either sales or service staff based upon, you know, sales goals, retention goals, whether there might be licensing goals, or if you're hiring a new employee, maybe a hiring bonus or that licensing bonus. So some ways that we can incentivize, you know, more sales, quicker sales, you know, quicker, quicker timeline to either get licensed or be ready to hit the ground running. Obviously hiring. So if this is a good time to hire and this is the opportunity to have some additional cash to be able to do so, that's great. Just one item there is you might maximize loan forgiveness, but you're still going to have an employee after the 8 weeks, so make sure that from a cash standpoint you're good to go. And then advance benefits. So some of this is you might have, based upon compensation plans with employees, some benefits that might kick in later in the year or at certain time frames of the year. It's okay to advance some of those bonuses. Now and actually pay for them during this 8-week period. So we can do that, whether it's, you know, certain types of matching or whether it is— whether it is a bonus based upon certain types of performance. You know, we can look to bring that up sooner in the year to be able to qualify. You know, at the end of the day, this— the payroll protection program is meant to, you know, really make sure that get money and maybe increase money into employees' pockets. So, definitely something that we can do. And then just for us, so the Club Capital promise here that we're going to continue to stay up to date as much as possible. We are now a payroll protection program shop, I feel like at this point. So, we will be staying up to date on legislation and industry guidance as much as we can, and we're going to provide tools checklists, and then continued webinars like this over the coming months to be able to keep everybody else up to date and help manage some of these funds that, you know, people are seeing come into their accounts. And just a quick sneak peek, as I've been trying to stay slightly aware of some of the new legislation that's even being passed right now, There appears to be some other legislation to help small businesses that's coming, and I don't even know what round this is now, round 3 or 4, that looks like have some initial votes on this month. Obviously, across from the different parties that it appears to be, I think this one's being pushed by the Democratic side. It's already been vetoed, I think, a little bit on, on the Republican side right now, but there is some more coming. It looks pretty substantial from what we're seeing, extending some of the periods beyond 8 weeks. Really, I wouldn't ask too much, too many questions on that right now because we don't know too much, but you know, there is going to be more legislation to stay abreast on, so we're going to do our best to really digest it on our side and put together some more presentations like this to keep everybody up to date. If you need or feel like you would like some one-on-one support, we do have some services available for that. You can reach out to us at support@club.capital or give the office a call at the number here or just find it on our website. But we'll dive into some questions right now. I think we can use the chat or maybe the Q&A function. We moved over to Zoom webinar from Zoom conferences. So Hopefully everybody can find the Q&A section there for us. But Devin, if you're on the line, if you're able to see some of the questions coming through and can sift through those, you know, what are some of the common questions coming in that I can help with?

Yeah, I figured there might be a lot of people on the line that we worked with to help secure loans through our partner at Blue Ridge. So this is a little bit geared towards those folks. And the question is, how do we find a date that they were actually funded since there were a couple different emails going out?

So it doesn't need to be, you know, the official date that maybe the SBA funded the bank. It's when you got access to the funds. So you're going to know when you got access to the funds, and so we're going to be using that date. So when you got access to the funds to be able to utilize, and they either, you know, you got access to a Blue Ridge Bank account, or that money was ACH'd over into your operating account, that's the date that we're going to be using. Excellent.

So another one is, in regards to headcount, what was the base period taken, and then when they get funded and it's looking at that number and whether they add or subtract. So what was that base period that was used? Was it an average? And how might people find out?

[Speaker:ANDREW_HOLMBERG] Yes. So the base period— yes. So the base period is looking at— so two options. Either— what is it— February 15th of 2019 to June 30th of 2019. So that's one base period you can look at. And then the other base period is going to be the two month— the first two months of this year, January and February. So it's average FTEs there. And so again, for all of our clients utilizing Gusto, you can go into your Gusto platform, go to reports, and the second one over there is called a Payroll Protection Program Forgiveness Report. And it will actually look at both periods should you have both periods. With the data in GUSDO, and it'll actually tell you which one is more beneficial for you. Okay? So that'll be on one of the pages. Just scroll down to probably page 4-ish, and you can see that. Great.

So this is a question, looks like it's coming from some sole proprietors out there, and it's really a two-part, so I'm going to combine a couple ones that I see here. It's in regards to net earnings. What do we do if the net earnings are down from last year? And then what do we do if the net earnings are actually up from last year and how the owner's replacement will come into play?

Yeah, no, good question. The bottom line here is that we're not going to look at net earnings of this year. So we're really going to be looking at— well, what I'll say there is we're not going to be looking at net earnings for this 8-week period. We're going to be looking at whatever net earnings were used to calculate the loan. Okay? So if net earnings went into it, then we're going to use that value that went into the calculation of the loan to determine owner compensation replacement. So in essence, it— so it's called replacement, right? We're going to take what you had before, or we're replacing it with the exact same value. Okay? So we're not going to be actually looking at the net earnings during this period. Whether it went down, whether it went up, is irrelevant during this 8-week period.

Excellent. And then if somebody that was a sole proprietor, when determining the loan amount on the front end of this process, did not include net earnings as self-employment and they only used payroll, are they still allowed to use whatever that payroll amount was to factor in as the owner replacement, or in that regard, are they only left with using the funded amount for actual payroll and none of that will come to them as the sole proprietor owner?

This might be a one-off that we might need to probably schedule to get a little bit more information, but from what I'm hearing right now, Sounds like a little bit of a unique case where we just, you know, where only payroll reports were utilized, not net earnings. In that case, I would only utilize payroll reports to substantiate it as well. I mean, that being the case, even if you did use net earnings, you would exceed likely the value of the loan, and so we're really just looking to substantiate the payroll amounts, you know. So if you were using payroll figures before, we'll use payroll figures again. We'll reach 100% payroll forgiveness. Excellent.

And then just one more question on the owner replacement is, let's just for easy numbers and they're popping in my head, if someone did in 2019 over that $100,000 ceiling, so that means that the amount that they were allowed to include in their loan was the $8,333. When it comes to the owner's replacement, whether it's that max amount that it would be or anything underneath that, when, when they utilize the owner's replacement, can they take it all out in bulk at once? Does it have to be chopped up month over month? What does that process look like for these sole proprietors?

Yeah, good question. So I think just a good reminder for everybody is that, you know, draws— so when somebody takes a draw from their business account, that does not equal net earnings. So you could take $50,000 out of your account right now, it really doesn't affect the profit and loss statement, which is your net earnings for the business. You know, a draw from the business is not an expense. So you can take whatever amount you want out of the business, you know, that you need to. It really doesn't matter when it comes to profit and loss statements. So we'll be, you know, utilizing, you know, that. So if you want to take the whole bulk amount out, go for it. It's not going to affect anything when it comes to reporting. Reporting is going to be looking at, you know, income statements, and things like that. And so draws don't go, you know, into that, especially from the sense of we're not looking at net earnings during this 8-week period. So totally fine to kind of do what you need there. We're going to be looking— we're going to be utilizing net earnings from the previous calculation, just looking at 2019 Schedule C, which is likely what we'll be using, plus payroll reports. So we're really not going to even be looking at the financials, let alone looking at bank statement records. So yeah, you can pull it all out from that perspective, but just I think more of a reminder is that, you know, your— if your draws happen to equal net earnings, that's rare, but draws do not equal net earnings. So just a reminder and refresher on that. Great.

So a question in regards to potentially making up for some of the 75% if they're at risk of not reaching that threshold. Can they give team increased pay for this 8-week period just because, or does it have to be specifically tied to production or something along the lines?

Uh, you can Immediate response is you can give increased pay. Yeah, not a problem at all. I mean, that follows the spirit of the legislation totally. I mean, I think just from a business perspective, from the consulting side, I would say tie it to, tie it to results, right? You know, let's put, you know, higher commission out there for, you know, higher commission, right? Don't just increase base pay, but, you know, we want to see, we want to see sales up. We want to see some stuff actually happen. From the increased pay. So you can certainly do it. I think just from the consulting side, I'd tie it to something. And then just another point on that is this is going to— so for any amount, you know, whether it's the entire amount or whether it's a certain portion of the Payroll Protection Program loan that does have to get paid back, you know, another side, from the consulting side of this, is it's also a 1% loan. And so, you know, if anybody has, you know, credit card debt out there or even, you know, other loans, lines of credit, it could be a good opportunity for you. I would need to probably know your situation and cash flow a little bit more, but it could just be a great opportunity to utilize cash at a 1% interest rate to pay off debt at higher interest rates. So you might not want to just pay it back, you know, in one lump sum at the end of these 8 weeks. You might want to take a look at, you know, what could you possibly do with, you know, with some cash at 1% at such a low interest rate to really be able to help you from a cash flow perspective as well.

Excellent. And then a couple questions coming in on the 8-week window. as it regards to payroll periods, and since payroll is for 8 weeks, right? So did they have to change their payroll dates in order to fit a certain amount into that period? How would that be looked at?

No, don't— no need to change payroll dates. There are some instances where we're looking at changing payroll check dates. So an example of that would be you know, if someone's final— their 8 weeks ended on July 4th. If July 4th— so no, obviously most of our clients pay on the 5th and the 20th of the month, so we might want to bring that check date back 2 days just because the payroll period has already happened. So we can just bring the check date back. That's the only thing I would look at changing. But really, I think primarily, you know, you're able to have 4 payroll periods for this 8 weeks, and you should be able to use the check date for all of them. So 4 check dates, that should be fine. We are looking at— there is some talk right now that you might be able to actually move the start date of the 8 weeks to a corresponding payroll period. That's still very up in the air right now, so I would really look at just what the check dates are for all of your payrolls. Anything else, Devin?

Yeah, we got a lot in. I'm just looking for some common themes here. So we can try to cover as many questions in one go as possible.

And it's certainly possible we can try and sift through, and if anybody has some specific questions that you don't feel like got answered today, You know, you can write to us at support@club.capital. You can request a meeting with us as well, and we'll try and get to as many of them as we can. Obviously can't get to, can't get to all of them on this, but we'll try and get to them and maybe send out some themes in another email or blog. Or, you know, it might tell us we need to do some digging on a certain topic and get back to you.

Actually, Mike, I was gonna say that there's a really good question from Chris Kelson. She said, if I have fewer employees on payroll but higher net earnings because of this, is that considered a fair trade for forgiveness?

Yeah, it's a good question. The answer to that would be no. So your net earnings, again, are going to be— we're going to be utilizing your net earnings from the previous period, or excuse me, the what was originally used. So your Schedule C from 2019 will be used for your net earnings for this period, and then we'll be looking at the, at the headcount specifically. So the headcount is kind of by itself. If you went down in headcount, they're going to really look at the percentage that you went down in headcount, and that will directly affect the loan forgiveness amount. So I mean, the biggest thing to do there, really two options: either hire back, right, to bring that employee back, or look to hire during this period.

Excellent. So we had some questions on what they can do to raise payroll for employees. So question for all the S-Corp owners out there, and there was a couple in here. In order to, you know, bump up the total payroll over this 8-week period, are they allowed to increase their own salary at no penalty for this time period in order to bump the wages up, or is that something that they will not be able to do?

So yeah, two pieces to that. One, yeah, we don't— I don't see any issue with that. Keep in mind, you can only raise it up to the $100,000 salary max. Anything above that doesn't go into the calculation. And then two, when it comes to the compensation reduction, just remember that it's— so that might get you to the total value of the loan for eligible payroll costs, but we're still going to be looking line by line for employees. On did their compensation get reduced. So even if yours goes up, right, we're still going to be looking at other employees to say, did their compensation get reduced during this period? Because it asks specifically, it says employees must make 75% of Q1 wages during this 8-week period. So again, the GUSTA report will show you this. If you click on that report, it'll show you what each person made in Q1, as well as every time you run a payroll, it'll show you how much they've made so far during the 8-week period. And so you're able to see what that percentage is that they've made, because any amount— each employee, any amount that they've made under the 75% threshold will be reduced from forgiveness. So it's quite a This one seems to be quite a stickler on it. We're looking for some more guidance from the AICPA to see, because technically 8 weeks should only be 66% of Q1 wages, but they're saying 75%. So inherently, even if somebody made the exact same salary and kind of compensation as, as Q1, you would expect it to be at 66%, not 75%. So We're trying to find some more guidance there, but for the time being, this is what we have. And so, you know, you're still going to have a line-by-line employee look at compensation reduction. So just increasing yours isn't, isn't necessarily going to solve the whole problem.

Excellent. I know we covered this in previous webinars, but just as a refresher for everybody on the utilities side of things, what utilities are being looked at and accepted for the forgiveness portion? And then how are those tracked for this 8-week period?

Yeah, so we're going to look at like monthly bills. So we're not going to necessarily say, okay, you know, it started on the 5th and ends on the 28th or whatever it is, right? We're just going to say, what were your bills during the 2-month period? And so we're going to want just the statements, probably e-statements, print them off, scan in PDFs. You're going to want to keep track of these. And it's going to be— it's very generous on the utility side. So think about your regular utilities, so water, gas, electric, sewer, trash. You know, not everybody has all these, but you know, all of them would apply. And then you also have internet, phone, and cable that can be included in that too. So especially those, those tend to be, you know, the higher dollar amounts. Anyway. So generally, any of those kind of key core utility services can be included. We looking good there, guys? Yeah, we are.

We do have some that are specific questions. So for those folks, please feel free to, uh, reach out to us directly if it wasn't more of a general question. We'd be happy to dive into it with you and provide some guidance there. We did have one final question that I want to bring up for everybody. It was from one of our Club Capital members, uh, if you could just give a quick overview on the PPP forgiveness consulting services that we've made available for the tail end management of these loans, and if they don't elect to do that, what the alternative is.

Yeah, sure. So, so we're going to be providing really everything that's needed in terms of checklist and process for how to file the application for forgiveness with Blue Ridge Bank. We're working with them to get, you know, kind of specific guidelines there on, you know, where to go, what, you know, what's the website, what to click on, what documents you need, how to do it. Should be a relatively straightforward process. So from our side, we're going to, you know, we're incredibly happy to provide the application process for loan origination, you know, free of charge. But it was, you know, certainly a large amount of work for our team. So This side of the house, we're going to be, you know, just pushing that back to agents to give them a choice of, you know, do they want— they can— here's how to do it yourself, and here's just the step-by-step instructions. Let us know, you know, what we can do to help there, you know, or you can engage us and kind of pass the responsibility to our team to manage the whole process, manage the back and forth with the bank. And then we can do, you know, some one-on-one consulting sessions during this period to make you feel really comfortable with kind of where you are. So we've had a lot of these already to date, you know, where we go over, you know, their specific scenario. We talk through their specific and look through the financials on their specific expenses and keep it in a, in a club capital tracker. That's shared with them, and then we meet, you know, 1 or 2 more times during the 8-week period to really track this. So some people want that level, you know, of support, and, you know, we're happy to provide it, you know, under the package, and some people don't. So, you know, it's up to you on whether you want that or need that, and you can, you know, reach out to us and let us know if that's something you would like some help with.

Excellent. And then for everybody that's on the line that's not a current Club Capital member, you know, I'd be remiss not to mention that I'd be more than happy to speak with all of you about our standard suite of services that we offer to comprehensive back office and financial management solution, really providing agents help on everything from payroll to accounting, financial reporting, and consultation, and then year-end tax services. So it's a, it's an all in one place, under one roof solution that was created by an agent for agents.

Awesome. Thanks, Devin. And thank you everybody for joining today. I hope this was helpful. If you still have any questions or anything that wasn't really answered today, or especially if it's very specific to your specific account or employees or things like that, certainly reach out to us, you know, outside of the webinar, support@club.capital, or our, our main phone line, and you can either, you know, ask for sales or support and get right through to us. So thank you again for joining. Please stay safe out there, and until next time, goodbye.