Donna Bordeaux walks through CARES Act relief programs for small businesses: EIDL loans up to $2M at 3.75%, PPP loans based on 2.5x monthly payroll, and forgiveness rules covering payroll, rent, and utilities. She covers eligibility, application steps, and how to document expenses as guidance continues to evolve.
Chapters
Well, good morning, everybody. I am Donna Bordeaux with campgroundaccounting.com we have several people that are in the midst of joining in, so we'll be starting here in just a moment. I will not delay too long. We'll get started right on time here in just a moment. So stick tight for just a sec and we'll be ready to roll. Sam Alrighty. Good morning, everybody. I am Donna Bordeaux with campgroundaccounting.com and we are going to do a presentation today about the business loans and grants that are available to help you through the COVID crisis. The CARES act that passed last Friday has sent us all into a whirlwind of information to let us see what's going on in our new world here. So we are going to get started here. So first of all, normally I would be displaying my full screen in presentation mode, but I want to be able to share several resources from websites and go directly into the bill for today's session. So I'll be doing this slightly differently than usual, but we will be diving into our material here in just a moment as a little housekeeping issue for you. We have everybody on mute. That will allow us to conserve bandwidth and eliminate any background noise. We are going to be using the chat for all questions today. So if you have questions, whether it's throughout the presentation or we'll be doing some Q and A at the end, I ask that you use the zoom chat function to type in your questions. I will try to be looking at those during the presentation and then if I miss anything, I will go back and get that at the end. Some things you'll find today are not going to have answers just yet. And if you've asked one of those kinds of questions, I'll let you know. And we will do the best to find any answers that are possible for the questions you have. All right, so initially, let's get started and talk about why we have these business loans and grants. I'm hearing a lot of controversy out there about who gets this money and how this is being divvied up. First, I want to remind everybody this is not a charitable handout program. We're going to talk about free money today, but in our context, I'm going to use that very sparingly. This is not an ethical dilemma that you should be facing whether or not your business should take the money. Every US Citizen is going to be paying for this money that's being handed out for years to come. So don't consider it a handout. Consider this to be an advanced credit on your future tax bills. So when I do with deal with taxes and accounting all throughout the year, I will tell you, I've never once had a client come to me and say, you know what? I don't want to itemize this year because I've got enough money to pay the tax bill. I don't want to burden anybody. I'll go ahead and pay more than my fair share. That doesn't happen in the world of taxes. And you need to look at these loans and grants in a very similar fashion. This is not an opportunity where you taking advantage of somebody or hurting someone else's business because you get the funding. This is a strategy and you must be willing to play the game. Just like in Monopoly. When you pass go and you collect the $200, you get that just for passing go. If you are an American business, you are meant to take advantage of these programs and utilize the funds. The only thing that really this whole program is based on is the fact that you're going to use that money to put people to work and to stimulate our economy. As soon as we can get past all of the stay at home orders and the quarantines. All right, so don't feel bad. This is not a decision whether or not you should take the money. If you are eligible and you qualify, you should be applying for what we're going to talk about today. All right, so let's get started. I want to first give you a little bit of resource guidance on where you can find more information Before I dive into all of the programs we're going to talk about today. There is a lot of misinformation out there. So I highly encourage you. Do not read an article in Forbes or on CNN or in some media outlet and assume that it is correct. Assume it's not. All right. I'm seeing so much bad information out there. So I want to encourage you to come back to the source and actually look at the bill or ask a question, look at the resources. Now, we have since the start of before this bill, once it passed the Senate and was waiting for House approval, we've been analyzing it. We've set up special pages on our website to take you to the latest and greatest information. And I'm updating this information constantly. So if you go to campgroundaccounting.com and click on the link at the top that says coronavirus resources, that will take you to the latest and greatest of our information. We're going to be talking about the financial relief criteria. Today. And I want to point you to a couple of sites here. When we're talking about the relief parts today, we'll be mentioning those and linking to some details. We also have a full summary of the CARE act, which is CORONA Aid, Relief and Economic Security Act. This is what was signed last Friday that put all these programs into place. Scrolling down a little bit more, we have some more about the economic impact disaster loan programs and also about due dates for tax returns. As most of you should already know, anything that was due April 15th for the federal government, whether it's taxes being filed, taxes being paid, or the first quarterly estimated payment for 2020, those have all been extended into July. So that should help you out. Also, I'll just mention while we're here, if you have an existing installment agreement and you're paying on a past due tax deadline, a past due tax bill, those are going to be stopped. The payments are supposed to be stopped during this period. Now we haven't received clear guidance whether you need to contact the IRS or if they were automatically going to do this, but you should not have to make payments on those. All right, Be careful though. Many of the states have not changed their deadlines or they have different deadlines. So if in doubt, we've got a spreadsheet here that is keeping up with all of the state deadline changes too. So feel free to reference that. When we talked about the CARES act bill, where all of this information is coming from. Just as a reference for you, at the very bottom of that article, here is a link to the complete bill details. We will be referring to this today throughout our journey in discussing these bills. And this is actually a pretty good link. It has quick hop, two sections where you can dive in. So I know most people are not really interested in reading a bill through our House and Senate, but this is one where if you have questions, this should be your go to spot to get the answers to specific questions, if indeed there are answers. All right, so let's get started in talking about some of the places where you can look for relief. Before we get into the actual programs, I also want to point out one other thing. Locally and statewide there are grants available. These are hit or miss as to where they are and you're going to have to look around a little bit for them. We do have a link on our website that has some of these programs listed. So there is a listing here and I'm going to pop in here and show you because there's one important part you need to know when you open this link to see the grants that are available. Don't be scared. If you see a blank page, pop down to the bottom. There are tabs available in this sheet. And if you go over to the US Public Support tab, it will show you all of the federal programs. And I won't say this is a comprehensive list. I'm actually not even sure who's putting this together, but it was a really great resource, so I didn't want to pass it by. So if you scroll down, you'll be looking at different states and different programs they have. So they've launched specific programs in each state and this will give you some insight into your particular state. There are also some local programs going on as well. Typically, when you're talking about grants, these are first come, first serve funding opportunities. So apply early and often and make sure that you track that information now. All right, so that was the link under number one. All right, let's get into the Eidl Loan and the emergency grant. We're going to use some acronyms today, so bear with me. The Eidl grant stands for Economic Impact Disaster Loan. That is the name of this program. Now, this is not a new program. The Economic Impact Disaster Loan program has been around a long time and has been through a lot of federal emergency type disasters. However, there are new opportunities with this credit. People were reading the bill last week before it had passed the house and applying for this loan so much on the SBA's website that it crashed the application. They then went to paper submission. Then by the end of the week, when the actual bill was passed, they redid the application online and they told everybody if you applied before last Sunday night when the new application went live, you will need to apply again. So I'll repeat that one other time. If you applied before Sunday night at around 9 o' clock on the SBA website, you will need to reapply. Now, I'm going to take you through what that application process is going to ask you here in a moment. Now, there are two components to this Eidl loan. There is a loan provision, which is a traditional SBA loan, where you're going to have to have good credit, go through underwriting. But the immediate thing that you've probably heard people talking about is that this one is different in that it allows you to select to apply for a $10,000 emergency grant. If we take a look at the bill in the house here, it's in section 1110. All right. To apply for any of these, you're going to have to have less than 500 employees for America's small businesses. That's pretty much I think everybody here. But just as a caveat when they talk about these emergency three day provisions, what they they did in the bill, if I can find it, I might not be able to find it real easily right off. But in this provision they said that the SBA has three days from the receipt of your application to make a $10,000 advance for an emergency grant. Okay, here we are. There we go. So such applicant send it to you within three days. So we all know in government three days is not long enough for much of anything to happen. But what happened on the application is when you applied, if you check that box for the emergency grant, you were asked to supply your direct deposit information and that is where they will be depositing those funds as far as we know. Now I mentioned the application actually became available on Sunday night around 9:00pm Eastern Time. I actually put in an application at 9:30. So I should be one of the first people to know and I will keep everyone posted as we get more information. But if we count the three days, Monday would have been day one that the administrator received it Tuesday, Wednesday. So we were actually on Thursday. Now we are day four. But to me it's a little unclear. Does that mean that they're going to send the ACH after day three? So we have two more days for that to process? We don't know. I've been watching all of the information and so far we've not seen anyone report that they have received the money yet. So we're going to be patient. But let me mention one other part about this advance grant. It does not have to be paid back even if you were denied the loan. So this is where we hear all the talk of free money. Okay? The the actual application was for up to $10,000. We also don't know anything about what they would use to determine if you got less than $10,000. The only thing that's asked on the application are your gross sales for the period of 12 months, your cost of goods sold. Now there is even a lot of controversy and question about what goes in cost of goods sold. Honestly, I don't think it really matters at this point. You'll put in your application on the SBA website and the SBA administers this entire program. The SBA then will, after they've got through the applications, contact you for additional information to see if you qualify for the loan. You do not apply and ask for a certain dollar amount The SBA will determine how much money you get based on their underwriting. Now, let's talk about what you use this money for. There's very specific what the use of funds are. If we look in the bill, we can use it to pay employees. We can use it for costs, especially if they're increased costs, because you can't get things through your normal supply chains like toilet paper. You can use it for making rent or mortgage payments and repaying obligations that cannot be met due to revenue losses. All right, let's look at the repayment again, because some people say, I don't know, really, do we not have to pay this back? An applicant shall not be required to repay any amounts of the advance provided under this subsection, even if subsequently denied a loan under 7, which is the Eidl Act. All right, so we got that information out to our VIP clients first thing Monday morning, and we ask that they all apply for the Eidl loan. Now, one other thing you need to know. The authorization of appropriations here in the bill is for $10 billion to be allocated to this emergency grant. Now, let's do a little math. If everybody got $10,000 and we have 10 billion, that means that 1 million businesses should receive the $10,000. That may sound like a lot, however, There are over 300 million small businesses in the United States, not counting the ones who came out of the woodwork since last week. So it is a very important criteria that you apply for this early. If you do not apply early, these funds will run out. Now, I've seen some talk on a board, and I will not confirm this, and I would not suggest that you not apply. But I have seen, based on confirmation numbers that you receive when you apply, that it looks like more than a million people may have applied already. Do not let that discourage you. If you were in business by February 15, you should be applying for this grant. The worst that can happen is that you're denied the loan and you get to keep the $10,000 for your business use. All right, so that is the Eidl loan or the Eidl grant. The loan is up to $2 million with repayment terms at 3.75% interest over up to 30 years. All right, so the loan part of this is going to be a long and pretty painful process, kind of like going through the mortgage process. I do not expect the loans to be very expedient, especially considering how many people will be applying to them and that the SBA has a limited number of staff to handle this. They are looking to expand that staff, but obviously that's a difficult thing to do in a really quick time frame. All right, let me read just a little bit about questions here. We have a family partnership. We don't have employees, but we use independent contractors. Can we consider them for this funding? Yes. We'll talk about the independent contractor part in just a moment under the PPP section. But for the most part, independent contractors under this bill, which this has never been done before, are almost considered to be the same as payroll or employee costs. All right. Secondly, what if you filled out the application for the advance grant but didn't provide direct deposit information? I don't know. We don't know what will happen in that situation. Honestly, we don't know what's going to happen in the direct deposit situation. So that would be a wait and see. I don't know. My guess is that your chances may be a little lower. I would suggest you go back and see if there's any way you can add that. I don't know if that's even a possibility. Another one, we are currently in the queue to close a 7 loan for expansion and upgrade. Do you know how the CARES act will affect the terms? I think the existing Eidl loan program is completely separate than a normal SBA loan that you would use for expansion of a business. My guess would be there'll be no change to the normal process for the seven loans, but that the time frame will greatly decrease. Also, it may be tougher to get those expansion loans or other loans to purchase a business right now because they are uncertain as to your income sources and ability to repay that loan because of the current economic crisis. All right. Somebody asked about a direct link to the application. Yes. Let me take you back on our coronavirus page here. If you will hop down to the economic impact. I thought I added this in last night. Oh, maybe I didn't. I'm sorry if I did not. Oh, here it is. Sorry. Right here in this paragraph. The application is right here at the end. COVID19 relief.sba.gov all right, so click through on our website there and you'll be able to go directly to that application process. Again, not much to it. It's asking your name and address info. If you are using webcams, you probably won't qualify. There's some very unique qualification pieces in that review and check off section. Kind of funny. All right, so that's our Eidl loan. Also, one other person asked if you can use this to refinance an Existing loan for purchase or mortgage? I don't know at this point. It may be possible, but that's going to be a few weeks down the road. So we don't have specific guidance on that as yet. All right, so the latest and greatest news for this week that we're talking about now is the PPP loan. All right. New acronym PPP is Payroll Protection Program. This is the second component. This is a loan that is going to be administered by local banks and by any seven a lender who chooses to do so. And what happens with these is that you're going to use a specific formula to determine how much you are allowed to get on this loan. It's based on 2.5 times payroll costs. We will talk about what payroll costs are here in just a moment. And then this program is meant to provide funding through June 30th. After June 30th of 2020, you will be able to apply for forgiveness of all or a portion of this loan. Again, we'll talk about the details of that in just a moment. Okay, so let's take a look at what all is included in this payroll cost number. Okay. If you will click through on the page that's listed there for the PPP loans with forgiveness, we have a separate page specifically for this. The application was just released yesterday, actually the day before, about 6:30 in the evening. And we have the details here. The details are actually coming from the Treasury Department. They provided the details about the PPP loan and the application. Now this application I think is a summary application that will be used by some lenders. Others may use their own form or put it online. The SBA is administering and getting all their criteria set. But as far as when you can apply, it's starting tomorrow that you would be able to apply with banks who will accept your application. I'm seeing a lot of information out there about banks. Some banks I contacted some yesterday that were in my local market for my clients. And some said, we don't know what that is. I don't think we're participating. Others said their phone lines were inundated with calls about it. I think that you will find that most banks who are doing small business lending through the SBA will be participating. Some will be more on the ball than others. So the first place you want to start is with your bank. There are several banks who are saying they will process these loans for their clients first. They will be given priority. Chase indicated yesterday that they will only process if you have an account with them. And it had to Be open in February. You can't run an open one now. So this is going to vary bank to bank. I suggest that you get contact with your bank today. Find out what their program is. If your bank is not participating, look for another bank that is participating that will be accepting. Now, there are SBA lenders who are not banks who will also be offering the program for people who are not their customers. However, if they. I spoke with one of the largest lenders in the country and they said we will be processing our clients first, our existing customers with loans first, and then we will get to others. Okay, so check in, do a little homework and research and get this process in the works. Let your bank know that you want to be included in the details of this in the the answers. Okay, so what costs can I include in annual payroll costs? All right, the application. Let me show you the application for a moment. The application says average monthly payroll. You fill in the number, you multiply by 2.2 and it's as easy as that. Alright. However, the definition of monthly payroll is not just the hourly wages and salary that you pay people. If you use that number, you're going to shortchange yourself. So let's talk about the components. This is the text directly from the bill. So salary, wage, commissions or similar compensation. If you have cash tips included, you can add those in payment for vacation, family medical leave, dismissal or severance pay, separation pay payment included for group health benefits, including insurance premiums. So if you have a group health insurance policy that can be included. Been asked by several. If we have our own policy for the owners of the company, that is through a private carrier, an individual policy, or through the exchange. Can I include that? If you're doing it right, that should already be included on your W2 at the end of the year. So I think you can, if you've included it Properly, on your W2 payment of any retirement benefits. This is a very unique one. All right, so the government is going to subsidize the employer contribution to any retirement plan. So if you have a 401k plan for your company and you have employer contributions, or if you have a set plan where the employer is making contributions, those can be included in payroll costs. Next up, payment of state and local taxes assessed on compensation of employees. All right, we did not include federal payroll taxes in this calculation. This was just wages. But we can include state or local taxes that are assessed on compensation. This would be your state unemployment. And also if you have any state funds that have to be paid in several states Have SUI and sdi, those kinds of things included, or any local taxes that are paid by the employer. All right, now let's look at part two here a minute. And the sum of payments of any compensation or income of a sole proprietorship or independent contractor, that is wage, commission, net earnings or similar compensation limited to $100,000 per year. So independent contractors can be added to this number. There is a lot of controversy about this because we can't. We don't really have any details on what. But the intent is, if this was, for example, a work camper who would have otherwise been classified as an employee, they should be included. If you sub out your cleaning service, for example, your independent contractor could be included because you otherwise would have had to have someone else be a worker to do that. All right, now, what's unclear about it is what If I paid $10,000 to a guy to pave my entranceway and dig some holes and do some remodeling? We don't know. It's not clear. I am suggesting that you look at this and think about what the intent probably is. If in doubt, I would suggest including it. You can always take it back out or repay that part. All right? So don't forget those other things that should be added. All right? Now, that is the part that can be included on the application under these payroll costs. Okay. All right. So another really important provision of this loan is the forgiveness element. What the forgiveness is, is after June 30, you're going to figure out what you use the money for. And if you use the money in the right way, you will not have to repay this loan. This loan is 100% guaranteed by the SBA. Typically, loans are guaranteed maybe at 75%, so that if the bank makes a $100,000 loan, the SBA guarantees 75%. If you never make a payment on that loan and you default, the bank would get 75,000 to make them whole from the SBA, and that $25,000 would be where they take the hit in this case. This is 100% guaranteed by the SBA. So the bank takes no risk in issuing this loan. That is why there is not supposed to be any formal underwriting process going on here. So you don't have to have good credit, you don't have to have collateral. There is no personal guarantee for this loan at all. Now, I have seen banks that have a list that's coming out along with their application saying that you need to provide tax returns, personal tax returns, financial statements, blah, blah, blah, all of these laundry list of items that they would use in a normal SBA loan case, I think you will find that they're not reading all of the details yet and putting out more information than necessary for what should be required. If we go back to the bill for a moment, the bill says, let me go up to the top and go back to the payroll part of this. Under paycheck protection on what should be used as a criteria. There we go. Borrower's requirements. What should we use as criteria? Is a certification that you say, yes, I'm going to use this in good faith for what I'm supposed to do. Okay. And they have a couple of criteria there. They are not supposed to be doing any other skeptic type things like you would on a normal sba. And why would they? The bank has no risk. It doesn't make sense that they would want to put all their time into underwriting. Now you may say, what's in it for the bank? The bank gets a fee from the SBA, 5% if the loans under $350,000 for administering this loan. So my take again, personal opinion here, I think the banks are going to figure out I have a pile of money, I need to start figuring out who to hand this out to get a federal ID number, we'll start collecting payments and if later on they default, we're going to be okay. The bank, the SBA will give us the money. So I have heard talk yesterday that this would be a slower process and that might take longer. I don't expect that. Again, my personal opinion, I expect the banks to pick this and pick this up and run with it. Alright? I think the lenders who are big time SBA lenders understand how fees work and they will be processing these very quickly. Okay, here's where they're going to get their 5%, 3% if it's between 350 and $2 million. All right, so the banks will not charge you any fees on these. They are not permitted to charge you as the borrower on these loans. Okay, let's go back to forgiveness. Got a little sidetracked there, but we're going to talk about forgiveness for a moment. All right, let's find the forgiveness provisions. What can I use the money for and how do I get it forgiven? Okay, forgiveness can be used for four different things. If you use the funding of this loan for payroll costs as defined before, any payment of interest on a mortgage, interest only, not the payment and no prepayment. Any payment on a rent obligation and Any covered utility utilities being electric, water, gas, sewer, telephone and Internet. All right, so that's what can be forgiven. Now, how do we determine what gets forgiven? There's one other criteria. The whole purpose of the payroll protection program is to tell you we want you to employ people. So there's going to be a ratio looking at your employees. Here's the limits on forgiveness section we are going to look at. And I believe this is what they're asking for in the application process here. On the application it says number of jobs. There is no instruction at all as to what goes on that field. But my best guess is that they're referring to this number. The average number of full time equivalents per month employed by the eligible recipient during the period 2-15-2019 to 6-13-19. They're going to take a ratio. If you had five full time equivalents for this period in 2019, they're going to look to see how many you had for this same period in 2020. That's how they're going to determine the calculation. Okay, now there's. That is seems like it's straightforward. It is absolutely not. There is no definition of what a full time equivalent employee is. The Department of Labor does not define what full time is. That is left to the employer to determine. So what you need to know is we'll probably get more guidance as we get down the road. The forgiveness part will not come into June. So my advice is go ahead and get the loan and then figure out what you have to do for the forgiveness part. Make sure that you'll be bringing. You don't have to bring back the same people either. You just have to have people. And also, this does not say that you cannot replace a $50,000 a year manager with a $25,000 a year worker if each are full time. It does talk about reduction relating to the wages. And that's mostly saying, if I had a full time employee that I paid $50,000 and I brought him back and paid him half of his normal wages, that that could cause a problem. So you can read more detail here. I don't think that's a big issue at this point to be concerned about. Go ahead, like I said, focus on getting the loan. And then as we get further guidance before June, we'll focus on how to make sure it's all forgiven. Okay. Worst case, you don't get a forgiven. This turns into a loan. It can be up to $10 million. Now, you'd have to have a lot of payroll to make this be $10 million. Its repayment structure is 4% interest up to 10 years. That would be up to the bank to help you decide that if indeed it's unforgiven. Alright, so let me check in for some questions in our chat for a moment. If you're seasonal, how do you determine your employee count? All right. That is in here. I'll see if I can find it. If you are seasonal. There we go. Seasonal. Here's part two. You will take the same period February 15th of 19 to June 30th of 19 and use that same period going forward. All right. If you just started your business this year or after not having a full year last year, you can use an alternative calculation using January 1 to February 29 to determine the average number of employees per month. All right. Are taxes on the income of employees emergency? Okay. The emergency grant is a taxable no, it is not taxable in any way, shape or form. Also, the forgiveness typically if you have cancellation of debt that is taxable, the forgiveness on the PPP loan is not taxable. All right. Our company is able to apply for the IDEAL loan and the ppp. Yes, there's a lot of poor information out there about this topic. You can apply for both. You can even have both approved. If you have both approved though, you cannot use the monies for the same thing. So for example, you could use the PPP for payroll costs, use the EIDL for your rent or utilities or something that else is qualified for that loan. Okay. Can you use for past interest that's been deferred? Not sure. Again, we have to look back at the let's look back here. It said any payment of interest on a covered mortgage obligation which shall not include any prepayment or payment of principal. So I don't know. It appears so, but I would not bank on that as my law. There may be further guidance that will come out with that. How would independent contractors be included in the full time equivalent? Good question. Don't know. There are a lot of questions still be answered for self employed and independent contractor type questions. If you use work campers, do you include the barter amount? Only if it was included on the 1099 and actually reported in most cases. If you are not supplying them with a 1099 and you're just giving them the site they should be paying taxes on barter. But if you're not issuing that on a 1099, I don't believe you can include it. What about owner withdrawals for salary? Should it be included in the PPP loan if it was on a W2, yes. My suggestion is if you paid self employment tax on it. So if it's a guaranteed partner payment. If it was a draw on self employment, yes. If it was a distribution out of an S corp, no. How do we get to the page we're looking at? This is the bill for the law. If you go to our coronavirus page, go to the bottom of the CARES act and you will find a link to the complete bill. This is Bill HR748 that passed last week. It's on Congress.gov where I'm referring to if an employee makes more than $100,000, do we only count $100,000 or not count it at all? You count up to $100,000. Leave off anything over that. And are employee independent contractors included in employee counts? Again, we don't know. That's my best guess for you. I would suggest that on this application, since they were so loose on not including any instruction at all, I don't believe anybody will be held to anything specific here. I don't think this will be included in your forgiveness number. I think you'll provide additional documentation for the forgiveness. That also reminds me, in the forgiveness section, you are not able to be forgiven if you do not provide documentation. So I think although we have no documentation on the front end, there will be a lot to prove when it comes time to getting this forgiveness in place. So make sure I can't find the exact section now, but make sure that you include and store all of the bills that you are paying for these utilities or rent or mortgage interest or payroll. Okay. All right, so it's going to talk about some of that here. I don't think I have the right section, so forgive me there. All right, so those are the two giant programs. All right, so you'd be ready to apply for PPP tomorrow. One other quick question. Somebody added in my bank quoted 0.5% interest on PPP. The 0.5%. I've seen that as well. It is up to 4% interest. I have seen the 0.5. I think the 0.5 might be up until June 30th. I am not sure how that works yet. All I can suggest is when you get the loan, read the paperwork to figure out what your actual rate is. And it may differ bank to bank. We don't know yet. Okay. All right, I'm going to move on to the retirement and loan portion here. Retirements, typically, if you took money out of your 401k to help you. I'll put a caveat on the front here. We are not at all talking about Rob's plans today. Okay? So this is not at all anything to do with a Robs plan. If you have that in your campground right now. This is strictly Talking about a 401k, an IRA or some type of retirement plan that you have outside of your business in your personal name. Right now, typically, if you took money out of one of those plans as an emergency to go back up and put into your business, you would be limited to $50,000. I'm sorry, I'm skipping ahead. You would be limited to the fact that you're going to have to pay on that money. And if you're under the age of 59 and a half without a good reason, meaning the IRS reasons, you will pay a 10% penalty as well on those distributions. You will, under the new requirement. If you're pulling out this money for coronavirus related purposes, which is a pretty loose definition, you can take out up to $100,000 and the 10% penalty is waived. Never before have we seen this. But you can also put the money back within the next three years without having any penalty or anything on. You don't have to pay tax on it. Normally you'd have to be able to use the limits in your payroll to allow you to put that money back. In this case, you don't have to have any limitations. You could put the money back. If you choose not to. The taxes will be split up over three years. All right. If you have a retirement plan currently that you're participating in that has loan provisions available, typically those are limited to 50% of the balance of your account or $50,000, whichever is less. In this case, they've changed that. You can use up to 100% of your balance or $100,000, whichever is less. Typically you pay back those payments on that loan up to five years. There's no prepayment penalty. In this case, you'll get an extra advantage in that you can wait one year before making payments and then pay it back over five years. You'll also be paying back interest on that, which is an attempt to replace the earnings that that money would have made in the market. So you will get to put back more than the $100,000 if you're putting back the interest too. So that's the advantage. All right, those are my five suggestions in looking at financing and how to get money today for your campground. Now I will tell you, just a tiny little plug here at the END. If you are interested, we are doing a complete webinar or, sorry, a complete video series that will walk you through how to apply for these loans. What information is needed in detail, more detail than we're able to cover in today's webinar. And that price is normally going to be 199, but this week, if you sign up for it, you can do that for only $99. All you have to do is click through on that link on our website and it will take you to the place you can purchase. All right. I will be releasing that information on Monday. We're waiting for a few final things to come through that will be helping to get you through the details and a lot of these unanswered questions. We're hoping to have some further details once the PPP program starts up. All right, so if you're interested in that, make that purchase before midnight tomorrow and you'll be getting it at half price for $99. All right. All right. Before I hit the rest of the questions, I want to go through a couple things here. I'm going to go very quickly through this and I will show you. This is also available on our Coronavirus page. Under the CARES act, there are a couple of other really quick provisions that I'm not going to spend a lot of time on. First, the immediate tax rebate credit. Everybody's going to get a stimulus check. As long as you filed and had a federal Social Security number, you are entitled to probably some credit as long as your income was under about $200,000. If you you're married, you can check the amount. I have a link to the calculator where you can go look and see how much you qualify for and what your expected stimulus check would be. The detail in the bill says the IRS commissioner is supposed to get this out immediately. I think immediately would be by the end of the month, but that's just my guess. All right, unemployment. What you need to know is there's a special little kicker going on for an extra $600 a week in benefits. The part that matters to you is if you have people on unemployment, they may be making more money than they make when they work with you, so watch out. Also, some people have asked, they have questions about should I furlough people or should I not? It may be helpful to your worker to furlough them at this point. All right. There will be this year, even if you're not able to itemize your deductions, you can deduct the first $300 of your charitable contributions to qualified charitable organizations still have to have receipts. Required minimum distributions. If you're over the age of 70 and a half, you do not have to take a required minimum distribution this year from your retirement plans. If you don't know what that means, don't worry about it. You probably don't have it. Net operating loss is if you have a net operating loss in 20, 18, 19 or 20, you'll be able to carry that back for five years. We used to have this provision with varying lengths of time, and a couple years ago they stopped it and said you can only carry it forward. Now, temporarily, you'll be able to go back. If you have a student loan administered by the federal government, you should be able to not make payments for three, possibly six months with no interest. Contact your loan provider before you stop making payments and make sure that they're on board. Also, if you have an SBA loan payment, an existing SBA loan before all this happened, you should be able to contact your loan provider and not make any payments for six months. And lastly, the employer portion of payroll taxes, the 6.2% share of Social Security from now until December 31, you do not have to pay it. Now. You can split it and pay it in two equal payments on December 31st of 2021 and 2022. I don't see this being a large number unless you have a lot of employees. So I think it'll create more of an administrative nightwear than a help. But it is a way that you can defer cash payments. All right, I know we covered a lot of information. I want to give you one other piece. Next steps. Most people are looking at me at this point with their eyes glazed over. I don't know what should I do? I'm going to lay it out for you, so pay attention here. First off, if you've not already done so, apply for the EIDL grant immediately. All right, apply for that grant. Next up, this was from yesterday when I did this. But also there's a new law that takes effect, I believe today or tomorrow, I can't remember, regarding the sick pay issues. This is again more of an HR area than a tax area. But if you have workers who should be furloughed, go ahead and furlough them today. Next few days, get in touch with the bank, get info lined up for the PPP loan and gather your annual payroll cost calculation. Next three to seven days, watch for emails from the SBA about that Eidl, and watch your bank account. Submit your PPP loan. You could start submitting April 3rd. It's a little confusing, but it says that independent contractors and sole proprietors can't have to wait till April 10th. We don't know why. There's no difference in those two terms. I'm clueless. All right. And over the next two weeks, make sure that your financial statements are completely up to date. If this is something you struggle with, I'd be happy to have a separate offline conversation with you about how we assist with financial statements. All of our clients are always up to date on their financials and also tax returns. Have those ready. You may need them in applying for loans or especially the Eidl or any state or federal grants. Some of those may require that. Also, you'll want to think about systems to have in place to document the loan forgiveness and all of the expense items that could be forgiven there. All right, you have a few days before you have to do that. All right, that is the conclusion part of my presentation, but I'm going to go back to the chat now and see where I left off and see if there are any other questions. Let's see, where do we leave off? Okay. Are we going to get a recording of this webinar? Yes, I will send that back out. It will take a day or so before I have that, but I'll send it out. Does the 100,401k loan have an expiration on its availability? I'd have to look at the bill to tell you, but I doubt it. I think it's probably through June 30th. It would be my expectation. Most of the coronavirus relief they are assuming is through June 30th. If we have an LLC that owns campground property and our campground business pays rent. Okay, so you have two entities. Yes. Very important point. The EIDL grant, you can apply for that based on federal ID number. So if you have multiple entities, you can apply for it multiple times. One per federal ID number. The PPP loan. Traditionally, in that structure of operating entity versus asset entity, only one of them has payroll, so only one of them would be able to apply for the PPP loan. All right. Two others that I've received. I think we already answered this. Everyone working is an employee, but we have one independent contractor. Yes. Include both for payroll costs and one other one being an owner with an S Corp. I draw my salary and issue W2 and distributions. Can I count the salary part for PPP? Yes, absolutely. It is included in the W2. It should go on the payroll cost. All right. I will conclude our official session. I'll stick on here for just a few moments. If you have further questions pop those in the chat if you think of something later on. I know I've had to talk pretty quickly to get through all this material. This is a moving target. But if you have other questions along the way I urge you to join in with our business loan and grants toolkit. Sign up for that along with that I will be able to on an as needed basis assist with questions if they get too overwhelming. I might not but I will be able to help you with basic questions there as well. Well thank you so much and please let me know if you have any questions or if you need to be able to get that financial and tax information ready. We are still taking on new clients to be able to assist with that. If you need anything email me@donnaampgroundaccounting.com and thank you very much for your attention today.
