Surly Thread of Business Owners/Managers, Etc. & Current Business Climate

[VABuckeye 2,472]

Cares Act Overview from PNC Bank

[VABuckeye 2,472]

Fill this out for the immediate $10,000 in relief funds that DO NOT have to be repaid if the loan is not approved.

SBA Application

[shakahorn 1,645]

On 3/28/2020 at 10:48 AM, VABuckeye said:

You saw the part where it's 100% forgivable if you use the money for the intended purpose, right?  That makes it 0%.

Only 8 weeks of expenses is forgivable right?  I suppose if that's all you ask for, that could be 100%.

17 hours ago, Xian said:

So how do you actually start looking into these loans?  Through a bank? CPA? Lawyer?   Do I need to fill these out myself?  So far all three of mine haven’t been able to provide me with much details.  My lawyer, who is badass straight up said it’s moving to fast for him to make solid recommendations (we mostly use him for b2b and contract stuff) 

 

we furloughed two people last week for two weeks, it looks like we might still be able to apply for a loan if we back pay them?  

I think you can just hire them back and start paying them now.

[VABuckeye 2,472]

The loan is for 2.5 X payroll.

However, in addition to payroll, rent, utilities, health insurance premiums and interest on debt goes toward the amount ot be forgiven.

[Wally Pryor 5,261]

I don't see the 401k match covered under the PPP.    I could be missing it. 

[VABuckeye 2,472]

From the PNC Overview

Quote

Payroll includes salaries (capped at $100k per employee), tips, insurance, retirement benefits, etc.

I'm going to presume that insurance means health insurance premiums?  It would be amazing if it also included my other business insurance premiums.  It's also specifically includes retirement benefits.

[Wally Pryor 5,261]

Thanks. 

[G650 14,229]

8 minutes ago, VABuckeye said:

From the PNC Overview

I'm going to presume that insurance means health insurance premiums?  It would be amazing if it also included my other business insurance premiums.  It's also specifically includes retirement benefits.

Here's to hoping for workers comp

[VABuckeye 2,472]

Yep.  That'a big one for me as well.

[VABuckeye 2,472]

What about payroll paid to temp services used during the last year?

We do that frequently on larger projects.  I'm pretty sure I spent in excess of $200k on temp help last year.

[VABuckeye 2,472]

The temps count as 1099 subcontractors so it appears I am good to count them in the 12 month averaging for the loan.

[TexMex Horn 68]

Does anyone know if you can use the EIDL to cover payroll past the PPP $100K threshold? If I read correctly, the loans can both be acquired, but can not overlap at any point. If so, how do you prove what expenses were covered ?

[closetojumping 62,510]

By the time I type this, over 430,000 companies will have filed for the EIDL since the site changes for the SBA this weekend. That’s not public info, but anyone who’s worked on e-commerce site launches knows that when you enable ordering from customers, you don’t start the first order at #1. It looks like they started this process at order 3300xxxxxxx. I was a part of 7 filings today and they went up from 231k i finish tonight at 429k. Sequential. 

Why does that matter? They’ve set aside the $10k “emergency loan” that is really a grant with $10billion as part of the CARES Act. That means that 1,000,000 companies will get it. They’ll be out of eligibility for that funding by some time Wednesday/Thursday. 

Get your money (and your filings) right. Got 4 more tomorrow that are a bit more complicated. Hope everyone here gets theirs. 

[troph 24,781]

Yes it is a a rush but they will add more funding I would expect. They funded it with almost nothing.

 

Edit I’m referring to the EIDL loan not the $10k advance, sorry.

[victory88 5,663]

Applied for the EIDL loan and fucking forgot to check mark the 10k advance.  Sent in a second application.  Just ran payroll and rent today 17k out the door and this doesn’t include the CC bills and utilities.  No revenue coming in as we are mandated to be shut down.  It will be soul crushing watching this drain my working capital for my small business.

Also, wife works at the corporate office of a big retail company here in Dallas.  She just got an email for a meeting from HR and her CMO that says “do not forward” with only half her team invited.  Fully expecting for to be fired tomorrow.

Between my startup being shut down and getting drained every day of funds and my wife most likely losing her job tomorrow, this is going to be a really shitty year.  We will now have no income coming in between both our jobs as I’m not paying myself to keep my business afloat.  Our tax returns the last two years are above the 150k limit.  Will we not qualify for unemployment based on the tax returns?  

Fuck this virus.

Edited March 31, 2020 by victory88

[Brew 3,049]

$150k cutoff is the phase out for the stimulus checks, unemployment is not calculated on that limit. Look into the payroll tax credit that was passed in Friday’s bill. It applies to those with greater than 50% revenue loss.

There is a lot of misinformation out there and people confusing the different bill components. People need to slow down and make sure they understand all the options. On the PPP loans I haven’t run one yet for a client where it ends up 100% forgiveable. 80% seems normal.

[closetojumping 62,510]

58 minutes ago, victory88 said:

Applied for the EIDL loan and fucking forgot to check mark the 10k advance.  Sent in a second application.  Just ran payroll and rent today 17k out the door and this doesn’t include the CC bills and utilities.  No revenue coming in as we are mandated to be shut down.  It will be soul crushing watching this drain my working capital for my small business.

Also, wife works at the corporate office of a big retail company here in Dallas.  She just got an email for a meeting from HR and her CMO that says “do not forward” with only half her team invited.  Fully expecting for to be fired tomorrow.

Between my startup being shut down and getting drained every day of funds and my wife most likely losing her job tomorrow, this is going to be a really shitty year.  We will now have no income coming in between both our jobs as I’m not paying myself to keep my business afloat.  Our tax returns the last two years are above the 150k limit.  Will we not qualify for unemployment based on the tax returns?  

Fuck this virus.

Good luck, dude. Apply for the PPP and it might buy you the time you need. 

[BradInATX 9,208]

Anyone know if a business has to show hardship to either get the loan or ultimately get forgiveness for it? Or can just any business take out a loan, use it for payroll, and have it forgiven down the road?

Asking for a friend.

 

 

[Incredulity 11,644]

43 minutes ago, BradInATX said:

Anyone know if a business has to show hardship to either get the loan or ultimately get forgiveness for it? Or can just any business take out a loan, use it for payroll, and have it forgiven down the road?

Asking for a friend.

 

 

As I understand you(or friend) will be asked to “certify” the funds were essential to being able to continue as a business.

 

no idea at this points the exact definition or othe caveats.

[Wally Pryor 5,261]

17 hours ago, VABuckeye said:

The temps count as 1099 subcontractors so it appears I am good to count them in the 12 month averaging for the loan.

Just to clarify, are you interpreting the definition of "payroll costs" to include direct employees as well as outsourcing / 1099ers? 

[ousuxndallas 65]

11 hours ago, closetojumping said:

By the time I type this, over 430,000 companies will have filed for the EIDL since the site changes for the SBA this weekend. That’s not public info, but anyone who’s worked on e-commerce site launches knows that when you enable ordering from customers, you don’t start the first order at #1. It looks like they started this process at order 3300xxxxxxx. I was a part of 7 filings today and they went up from 231k i finish tonight at 429k. Sequential. 

Why does that matter? They’ve set aside the $10k “emergency loan” that is really a grant with $10billion as part of the CARES Act. That means that 1,000,000 companies will get it. They’ll be out of eligibility for that funding by some time Wednesday/Thursday. 

Get your money (and your filings) right. Got 4 more tomorrow that are a bit more complicated. Hope everyone here gets theirs. 

Up to 553k this morning.  FYI.

[VABuckeye 2,472]

35 minutes ago, Wally Pryor said:

Just to clarify, are you interpreting the definition of "payroll costs" to include direct employees as well as outsourcing / 1099ers? 

Yes.

[ousuxndallas 65]

33 minutes ago, Wally Pryor said:

Just to clarify, are you interpreting the definition of "payroll costs" to include direct employees as well as outsourcing / 1099ers? 

Correct.  All W-2 and 1099 subcontractors can be included in "payroll costs".  Exclude any amount of W-2 and 1099 wages for individuals that are in excess of $100,000/year.  Also, it's salaries, wages, tips, health care insurance costs, and all federal/state payroll taxes.  Add it all up for last 12 months, take the monthly average, and multiply by 2.5x. 

That's the max amount of the loan you can receive.

 

For loan forgiveness, you may get up to 8 weeks of relief of payroll costs, rent, utilities, and mortgage interest expense.  There are a couple of "tests" that can lower the amount of loan forgiveness:

#1: are the number of your FTE (full-time-employees) for the 8-week period beginning on date of loan less than the average # of FTEs between Jan. 1, 2020 and Feb. 29, 2020?  If so, this reduces the amount of loan forgiveness.

#2: are any salaries reduced by 25% or more during this period?  If so, this reduces the amount of loan forgiveness.   

[po elvis 2,070]

1 minute ago, ousuxndallas said:

Correct.  All W-2 and 1099 subcontractors can be included in "payroll costs".

are you sure about this? I have been reading everywhere and can't get a definitive answer.

[Reagan1k 3,024]

Just now, ousuxndallas said:

Correct.  All W-2 and 1099 subcontractors can be included in "payroll costs".  Exclude any amount of W-2 and 1099 wages for individuals that are in excess of $100,000/year.  Also, it's salaries, wages, tips, health care insurance costs, and all federal/state payroll taxes. 

Are federal payroll taxes really included?  I thought I read a white paper yesterday that said state and local but did not include Federal.

I know this thing has been fluid and peoples' interpretations are varied / changing.  Any information on the Federal stuff being included is appreciated.

[Wulaw Horn 19,063]

4 minutes ago, Reagan1k said:

Are federal payroll taxes really included?  I thought I read a white paper yesterday that said state and local but did not include Federal.

I know this thing has been fluid and peoples' interpretations are varied / changing.  Any information on the Federal stuff being included is appreciated.

Verify this yourself but having read it myself I’m like 99.8% sure that yes, they are. I can’t imagine that they are including 401k and state taxes and not the federales. 

[po elvis 2,070]

everything I have read says only state and local taxes.

[Wulaw Horn 19,063]

2 minutes ago, po elvis said:

everything I have read says only state and local taxes.

Do you mean for including in calculation purposes for the 2.5x or in what’s forgiveable?

I could very well be wrong but I don’t understand this thought process. 

[po elvis 2,070]

2 minutes ago, Wulaw Horn said:

Do you mean for including in calculation purposes for the 2.5x or in what’s forgiveable?

I could very well be wrong but I don’t understand this thought process. 

I think both since you use the same calculations of payroll cost for the 2.5x and what is forgivable.

https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf

 

[Reagan1k 3,024]

4 minutes ago, po elvis said:

I think both since you use the same calculations of payroll cost for the 2.5x and what is forgivable.

https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf

 

Yep - With respect to calculating the 2.5x grant/loan amount I think it's fairly clear in that document that state and local payroll taxes are included - but "payroll taxes"- presumed to be Federal- are excluded.

EXCLUDED Payroll Cost: 1. Compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020 2. Payroll taxes, railroad retirement taxes, and income taxes

INCLUDED Payroll Cost: 1. For Employers: The sum of payments of any compensation with respect to employees that is a: • salary, wage, commission, or similar compensation; • payment of cash tip or equivalent; • payment for vacation, parental, family, medical, or sick leave • allowance for dismissal or separation • payment required for the provisions of group health care benefits, including insurance premiums • payment of any retirement benefit • payment of state or local tax assessed on the compensation of the employee

[Wulaw Horn 19,063]

Thanks guys. I’m really surprised and don’t understand that thought process. No big deal- still a great bill, just don’t get it from a logic perspective. 

[closetojumping 62,510]

36 minutes ago, Reagan1k said:

Yep - With respect to calculating the 2.5x grant/loan amount I think it's fairly clear in that document that state and local payroll taxes are included - but "payroll taxes"- presumed to be Federal- are excluded.

EXCLUDED Payroll Cost: 1. Compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020 2. Payroll taxes, railroad retirement taxes, and income taxes

INCLUDED Payroll Cost: 1. For Employers: The sum of payments of any compensation with respect to employees that is a: • salary, wage, commission, or similar compensation; • payment of cash tip or equivalent; • payment for vacation, parental, family, medical, or sick leave • allowance for dismissal or separation • payment required for the provisions of group health care benefits, including insurance premiums • payment of any retirement benefit • payment of state or local tax assessed on the compensation of the employee

From my understanding, it's the amount above the $100,000 in compensation for an employee that won't be a part of that calculation, correct? It's a ceiling, rather than an exclusion for having that FTE on payroll. 

[Coelenterate Fuccboi 13,087]

5 hours ago, BradInATX said:

Anyone know if a business has to show hardship to either get the loan or ultimately get forgiveness for it? Or can just any business take out a loan, use it for payroll, and have it forgiven down the road?

Asking for a friend.

 

 

Interesting, I’d didn’t figure you’d willingly associate with evil business owners much less claim them as friends.

[VABuckeye 2,472]

5 hours ago, BradInATX said:

Anyone know if a business has to show hardship to either get the loan or ultimately get forgiveness for it? Or can just any business take out a loan, use it for payroll, and have it forgiven down the road?

Asking for a friend.

 

 

From the PNC document

Quote

Borrowers must make a good faith certification that:  Loan is necessary to support the business through environment created by COVID-19  Funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments and utility payments  They have not otherwise received funds or have an application pending under the Paycheck Protection Program

 

[ousuxndallas 65]

1 hour ago, po elvis said:

everything I have read says only state and local taxes.

Yes, sorry for the misinformation.  I double checked the bill and you are correct:

 

" payment of State or local tax assessed on the compensation of employees;"

 

Directly from the bill.  

 

The 2.5x is the calculator used for LOAN AMOUNT CALCULATION, not for forgiveness.

Forgiveness is 8 weeks of wages, utilities, etc.  

Clear?

[BradInATX 9,208]

Interesting, I’d didn’t figure you’d willingly associate with evil business owners much less claim them as friends.

Are you lost? I have no idea what you're talking about or who you are.

[Reagan1k 3,024]

54 minutes ago, closetojumping said:

From my understanding, it's the amount above the $100,000 in compensation for an employee that won't be a part of that calculation, correct? It's a ceiling, rather than an exclusion for having that FTE on payroll. 

Correct - for the purpose of the 2.5x calculation, you exclude any compensation above $8333 per month per individual employee.

[closetojumping 62,510]

12 minutes ago, Reagan1k said:

Correct - for the purpose of the 2.5x calculation, you exclude any compensation above $8333 per month per individual employee.

Thanks, that confirms what I've been getting fed from the lawyers, accountants and bankers. Starting to see a lot of independent summaries coalescing around the same views on the key points, so that's good news.

[VABuckeye 2,472]

It's gonna be a clusterfuck.

[Wally Pryor 5,261]

Thanks for the feedback.  Good thread.   

Is there a broader definition of "employees" within payroll costs that specifically includes sub-contractors?   Not to belabor the issue but I don't see where is specifically says, or has been interpreted to say, that 1099ers fall under the PR cost umbrella.

 

 

[po elvis 2,070]

9 minutes ago, Wally Pryor said:

Thanks for the feedback.  Good thread.   

Is there a broader definition of "employees" within payroll costs that specifically includes sub-contractors?   Not to belabor the issue but I don't see where is specifically says, or has been interpreted to say, that 1099ers fall under the PR cost umbrella.

This is the specific verbage in the act about "what is payroll cost" pertaining to independent contractors...

Quote

the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation

some people believe that "compensation to independent contractor" means that if you paid compensation to an independent contractor you can include it.

some people believe that this means that independent contractors can use the amount that they are paid for a loan for themselves.

there has to be clarification on this coming. it is a HUGE deal.

[Wally Pryor 5,261]

Yeah, thus my question.  Unfortunately, I see the 2nd being true.  For employers, just W2 comp being under the payroll cost umbrella. 

I hope I'm wrong.  Not an unusual occurrence. 

 

[Spaulding Smails 1,552]

1 minute ago, Wally Pryor said:

Yeah, thus my question.  Unfortunately, I see the 2nd being true.  For employers, just W2 comp being under the payroll cost umbrella. 

I hope I'm wrong.  Not an unusual occurrence. 

 

It's my interpretation that, as an employer, the calculation for payroll is based on W2 wages only.  I'm going to clarify that on my call with my banker tomorrow.  

[po elvis 2,070]

this guy on Forbes has been writing and updating.

https://www.forbes.com/sites/peterjreilly/2020/03/30/paycheck-protection-programmaybe-next-week/#60878d231082

here is what he says about the 1099 contractors...

Quote

The Biggest Mystery

A lot of the questions I get involve sole proprietors, partnerships and the payment of people as independent contractors. In terms of the legislation the answer to those questions lies in the definition of “payroll costs” which includes this item:

“the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period” (Emphasis added)

What does that mean?

It reminds me of a joke about umpires talking about what constitutes a ball or a strike. The final grizzled old umpire says “Somes I calls ball. Somes I calls strikes. They ain’t nuthin till I calls em.”

Effectively your umpire is going to be the bank using the rule book that the SBA has not yet written.

My inclination is to take it to mean my net (or maybe gross) Schedule C income plus all the 1099 income I have paid out, but that’s just a theory. Some people are sure about what it means. I guess they can mock me next week if they turn out to be right.

 

 

[Wally Pryor 5,261]

3 minutes ago, Spaulding Smails said:

It's my interpretation that, as an employer, the calculation for payroll is based on W2 wages only.  

Same here.  Open season for me if my outsourcers can be included in payroll costs but thinking it's just my W-2'd staff. 

Am curious about the PTO payout included in the formula.   The sheer definition of it allows you to double dip as that paid PTO is already in the W-2 comp.  

[VABuckeye 2,472]

It does have the word "to".

That is what's making me think I can use it.  I mean, I certainly did pay out a significant amount of money to 1099 people.  If they aren't a business I don't see how they could even apply for a loan.

[Spaulding Smails 1,552]

1 minute ago, Wally Pryor said:

Same here.  Open season for me if my outsourcers can be included in payroll costs but thinking it's just my W-2'd staff. 

Am curious about the PTO payout included in the formula.   The sheer definition of it allows you to double dip as that paid PTO is already in the W-2 comp.  

That part was confusing to me as well.  You have to think it's going to be what's showing up on your payroll reports.  Wages, benefits, retirement, PTO.  Things that can be validated and confirmed.  If it is open to 1099s, it leaves it way to wide open for manipulating the subs and potential fraud.  I think there's going to be plenty of attempts at fraud as is, but isolating it to W2 reports at least makes it more standardized.

[po elvis 2,070]

2 minutes ago, VABuckeye said:

It does have the word "to".

That is what's making me think I can use it.  I mean, I certainly did pay out a significant amount of money to 1099 people.  If they aren't a business I don't see how they could even apply for a loan.

and to me it makes sense to include contractors because they still want businesses to pay contractors through this thing. if you use the contractor costs to determine your loan amount, you need to pay them in the 8 weeks following the loan to make sure you don't get your forgivable amount lowered.

[Wally Pryor 5,261]

2 minutes ago, po elvis said:

and to me it makes sense to include contractors because they still want businesses to pay contractors through this thing. if you use the contractor costs to determine your loan amount, you need to pay them in the 8 weeks following the loan to make sure you don't get your forgivable amount lowered.

Yes, this does make sense. 

 

[closetojumping 62,510]

33 minutes ago, po elvis said:

This is the specific verbage in the act about "what is payroll cost" pertaining to independent contractors...

some people believe that "compensation to independent contractor" means that if you paid compensation to an independent contractor you can include it.

some people believe that this means that independent contractors can use the amount that they are paid for a loan for themselves.

there has to be clarification on this coming. it is a HUGE deal.

I've read some of this stuff and figured, given the circumstances, they're purposefully being vague so that the banks can just sort as best as they think they can and get the liquidity pumping. They'll undoubtedly tie the loose ends off in a month+ when they can afford to get more stringent. 

I also thought I'd read that the contractor who serves basically in your employ as an extension of staff can be factored in, but the firm you outsource services to as a contractor would most certainly not be included.