CARES Act | Paycheck Protection Program
 

Hello everyone --

I am sure many of our business have been impacted by the COVID-19 outbreak. We are located just a few miles west of the Detroit city limit, which on a per-capital level will have it about as bad as anywhere in country. We have shuttered our operation until at least April 14th, but likely later, due to the severity of this. We are considering keeping everyone on payroll and using a CARES Act loan to cover payroll, with the understanding that the debt is canceled if we retain employees and pay them between 75%-100% of the earnings they had in the window of time between March 1 - June 30, 2019.

Here are my takeaways and some thoughts I put together last night -- can anyone else share their opinions on this?

• Payroll costs are eligible for forgiveness, including commissions/bonuses/continuation of employee benefits

• Rent is also eligible for forgiveness

• Forgiven debts are considered canceled indebtedness -- and this canceled debt is excluded from gross business income for tax purposes

• It looks like the forgiveness is also reduced in a few scenarios:

• The amount of forgiveness is dependent on FTE headcount between March 1-June 30, 2019 vs. the number of FTE employees paid via this forgivable loan between March 1-June 30, 2020... If the current headcount being paid via this program is less than full-time equivalent employees during these four months last year, forgiveness will be reduced by the corresponding percentage.
• The amount of forgiveness is also reduced by the amount of any reduction in pay over 25% for employees relative to what they earned in the months of March-June 2019 -- exception for earners over $33,333 between March-June 2019 or $100,000 annualized in 2019

• Considering that, we would need to pay employees an average of what they earned during the March-June 2019 range, the way I read things -- with numbers that are inclusive of commissions, bonuses, etc. If someone earned $20,000 in those four months last year, between commissions/bonuses/etc, we would need to pay $20,000/17.33 weeks = $1154 per week in order to see 100% forgiveness. For someone making $100,000+ a year in salary/bonus/commission/etc the math would be based on the maximum of $33,333 over the four month period, divide by 17.33 weeks = $1923 per week
• We could reduce the earnings amount calculated by the formula by up to 25%. If pay is reduced by more than 25% the additional reduction wouldn’t be forgivable under the program.

• If we use the Paycheck Protection Program, we wouldn't need to worry about the Employee Retention Tax credit that we were discussing yesterday, since they aren't compatible.

So I understand, u do not self fund this. U have money in hand in advance of payroll. All standard deductions from payroll apply, you pay employer social security tax and Medicare tax as normal and all employer payroll payments are reduced from the gross loan. In other words, your exposure is limited to following the rules (or are they “guidelines” ), and if you do so, all will be forgiven without interest.

Sounds like “cash for clunkers” on steroids.

Wish I was still in business to face another trial by fire. GOOD LUCK, in a most positive sense that will save your employees and u become a hero.

Good read, lots of good info, and it sounds like you are really on top of things.

Possum, you know our esteemed State Representative from Weatherford (Roger Williams), received "somewhere between $1 and $2 million" in PPP loan (free money) from the government in the first 2 week window of the program. Before most applicants could even get the application form started. He declined to give a specific amount. I'd be willing to bet if Roger said between one and two it was probably a lot closer to two. He is listed as one of the wealthiest members of Congress with a net worth of $67 million. That really chaps my ass.