PPP Loan Forgiveness: Key Information and Guidelines
The webinar provides essential insights into PPP loan forgiveness, covering how to qualify, certification requirements, and the types of expenses that are eligible for forgiveness. It emphasizes the importance of using funds for designated expenses within specific timeframes to ensure full loan forgiveness. Attendees are encouraged to ask questions and participate actively for a better understanding of the process. However, they must refrain from distractions to maintain focus on the presentation.
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Presentation Transcript
PPP LOAN FORGIVENESS For a more successful experience, please: Mute your phone or speaker; Submit any question you have on the Chat messaging Refrain from chatting (besides asking questions) during the presentation; we do not want attention diverted from the presentation
DISCLAIMER The information provided in this webinar is for information purposes only; it is not intended to be professional or legal advice; financial decisions should only be made after consultation with your attorney and/or accountant; CIOGC is a not for profit corporation cannot and does not recommend or endorse of the panelists; retention of a professional representation is a personal decision.
HOW TO QUALIFY FOR PPP LOAN FORGIVENESS PAYCHECK PROTECTION PROGRAM SERIES SPEAKER SALAH OBEIDALLAH EXECUTIVE DIRECTOR, NORTH AMERICAN ISLAMIC TRUST MASTER IN CORPORATE ACCOUNTING AND FINANCE. FORMERLY : PRESIDENT OF ISLAMIC CENTER OF PASSAIC COUNTY, NJ PRESIDENT OF A MANUFACTURING COMPANY IN NJ, PRESIDENT OF JAPANESE MACHINERY WHOLESALER ,AND DIRECTOR OF THREE ISLAMIC SCHOOLS IN NJ.
CERTIFICATION AND REPRESENTATION Businesses owned by private companies with adequate sources of liquidity to support the business's ongoing operations are not eligible for PPP loans. When you applied you certified that current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.
THINGS TO KNOW ABOUT PPP LOAN FORGIVENESS Borrowers who received loans from SBA will have their loans forgiven if they use the money for designated expenses. Borrowers are eligible for loan forgiveness for the amounts spent on authorized expenses over the eight weeks after receiving the loan. Lenders will forgive your PPP loan if you spend 100% of the funds on payroll,mortgage interest, rent, and utilities in the 8 weeks after receiving the loan. You must spend at least 75%, specifically on payroll.
WHAT IS INCLUDED IN PAYROLL COSTS FOR PPP? Salaries Group health insurance payments, Wages Retirement benefits payments, Cash tips or equivalents Some state/local payroll taxes. Payment for regular leaves of absence Vacation, parental, family, medical, or sick leave Dismissal or separation compensation
PAY AND SALARY REQUIREMENTS You must maintain at least 75% of total salary. This requirement will be individually assessed for every employee that received less than $100,000 in annualized pay in 2019. If the employee s pay over the 8 weeks is less than 75% of the pay that they received during the most recent quarter in which they were employed, the eligible amount for forgiveness will be reduced by the difference between their current pay and 75% of the original pay.
OTHER FORGIVABLE EXPENSES: 25% OF THE TOTAL Mortgage interest if the mortgage was signed before February 15, 2020 Rent as long as the lease agreement was in effect before February 15, 2020 Utilities as long as service began before February 15, 2020
TIME PERIOD COVERED Eight weeks of coverage Eligible expenses are those that are incurred over eight weeks, starting from the day the first payment was made by your lender. This is not necessarily the date on which you signed your loan agreement. It starts from the date you received your PPP Funds.
RECORDKEEPING & REQUIRED DOCUMENTS FOR FORGIVENESS You will have to APPLY for loan forgiveness. It will not automatically happen as you use the funds. Be prepared with required documents are: (Your lender may have additional requirements). Documents verifying the number of full-time equivalent employees on payroll and their pay rates, for the periods used to verify you met the staffing and pay requirements: Payroll reports from your payroll provider Payroll tax filings (Form 941) Income, payroll, and unemployment insurance filings from your state Documents verifying any retirement and health insurance contributions Documents verifying your eligible interest, rent, and utility payments (canceled checks, payment receipts, account statements)
STAFFING REQUIREMENTS Must maintain the number of employees on your payroll: First, determine the average number of full-time equivalent employees you had for: The 8-week period following your initial loan disbursement (A) February 15, 2019 to June 30, 2019 (B) and January 1, 2020 to February 29, 2020 (C) Divide A by B. Then divide A by C.Take the largest number you obtain of the two. If you get a number equal to or larger than 1 (one) , you successfully maintained your headcount and meet this requirement. If you get a number smaller than 1 (one), you did not maintain your headcount and your forgivable expenses will be reduced proportionately.
STAFFING REQUIREMENTS (CONTD) Depending on your payroll schedule, you may want to adjust the timing of your payroll date to accommodate as many payroll cycles as possible. For example, if your PPP loan gets deposited in your bank account on April 15, 2020, you could only use the funds on expenses incurred during the eight weeks following April 15, 2020.
WHAT HAPPENS IF NOT APPROVED FOR FORGIVENESS? Your lender may allow you to provide additional documentation so they can reevaluate your request. Otherwise, your outstanding balance will continue to accrue interest at 1%, for the remainder of the 2-year period. There is no prepayment penalty. You can pay off the outstanding balance at any time with no additional fees.
REHIRING GRACE PERIOD: You can rehire any staff that were laid off or were put on furlough and reinstate any pay that was decreased by more than 25% to meet the requirements for forgiveness. You have until June 30th to do so.
QUESTIONS OR COMMENTS We hope this was helpful. Good luck with the process.
