Payroll Protection Program Loan Forgiveness Open Questions
PPP Loan Forgiveness Open Questions
If you have take a take out a PPP/Payroll Protection Program Loan you may have questions on forgiveness.
Many people do.
We looked at the loan application in yesterday’s video:
Today we’ll follow-up on some viewer questions and discuss some open issues with the process.
What about employee counts?
What do we do if our employees are being paid by someone else?
Join attorney R. Shawn McBride on the McBride Attorneys Law Show YouTube Channel for an early review of this key document.
#sba #payrollprotection #ppp #ppploan #loans #business #smallbusiness #loanforgiveness #business planning
NOTE: Legal issues are discussed. This is for information and entertainment purposes. This is not legal advice and no attorney-client relationship is formed. Consult your own attorney.
Please comment with your thoughts and questions but do not include any confidential information.
And here is a machine transcript of today’s video:
1
00:00:01.199 –> 00:00:07.770
The Our Shawn: Hey everyone, it’s your friend. Our Sean McBride here with back with you. We want to talk a little more about the payroll.
2
00:00:08.099 –> 00:00:14.639
The Our Shawn: Protection Program and a loan forgiveness and, particularly, we want to zero in today on some open questions that are left
3
00:00:15.059 –> 00:00:25.620
The Our Shawn: From the process of doing the PPP application review and looking at what’s happening there. So let’s jump into it. We’re going to do it here from the McBride attorneys law show on YouTube if you missed
4
00:00:25.950 –> 00:00:36.840
The Our Shawn: The prior video where we looked at the PPP loan forgiveness application in general, you may want to zoom back to this and this, in fact, is from some user questions. Some comments we got
5
00:00:37.230 –> 00:00:41.850
The Our Shawn: On the first video, so we want to zoom in on some issues answer some questions for some folks.
6
00:00:42.330 –> 00:00:48.750
The Our Shawn: And let everybody know where kind of things stand with the government guidance here. This is obviously a quickly emerging issue.
7
00:00:49.080 –> 00:00:59.670
The Our Shawn: So you want to take a look at the application and figure out where we stand now, but if you haven’t seen the introductory video where we pulled up the PPP loan forgiveness application from sba.gov
8
00:01:00.030 –> 00:01:08.430
The Our Shawn: And took a look at it, you may want to go check that out. So I’m going to go ahead and start a screen share again. Today we’re going to be jumping into this
9
00:01:09.330 –> 00:01:17.970
The Our Shawn: PPP document here. Let me get that setup for us and we’ll jump over there and we’ll take a look at what we’re seeing in the document itself so
10
00:01:18.480 –> 00:01:30.600
The Our Shawn: Let’s do that here. So here we go. And I’m back on sba.gov again. You may recognize this from yesterday, we’re looking at the PPP loan forgiveness application.
11
00:01:31.170 –> 00:01:37.950
The Our Shawn: One of the questions that came up was about full time employees and what to do to calculate that. So,
12
00:01:38.460 –> 00:01:47.670
The Our Shawn: If you go down and look at the application. We actually now have some formulas and guidance for full time employees here and you can see
13
00:01:48.210 –> 00:01:56.730
The Our Shawn: There’s a calculation method outlined here for average full time equivalent employees. There were a lot of talk
14
00:01:57.300 –> 00:02:02.730
The Our Shawn: In the law firm world that may be full time equivalents gonna be 30 hours a week because there’s some
15
00:02:03.330 –> 00:02:12.750
The Our Shawn: guidance from the IRS. And, of course, a lot of this SBA payroll protection program is attached to tax law. So people thought maybe we’d look to the IRS guides
16
00:02:13.440 –> 00:02:21.990
The Our Shawn: Divided by 30 to calculate, who was a full time employees to take number of hours worked by employee divided by 30 and calculate but
17
00:02:22.500 –> 00:02:29.040
The Our Shawn: SBA throws us a curveball, here it goes back to your traditional what many people think of full time 40 hours a week, so
18
00:02:29.460 –> 00:02:37.770
The Our Shawn: You’re going to calculate whether somebody is a full time employee by figuring out whether they have full time equivalent, whether they work 40 hours a week.
19
00:02:38.520 –> 00:02:48.420
The Our Shawn: Now you’re around the nearest 10th somebody that works, you know, close to 40 is going to round up to being a 1.0 or a full time equivalent
20
00:02:50.400 –> 00:02:58.920
The Our Shawn: People that work and everybody’s kept at once. So you can’t have somebody who’s more than a full time employee and those of us that are business owners.
21
00:02:59.700 –> 00:03:06.630
The Our Shawn: May be more than a full time equivalent employees that were probably working more than 40 hours a week cap at one point.
22
00:03:07.350 –> 00:03:14.280
The Our Shawn: You also have an option to simplify this method, rather than put everybody’s hours in this sheet.
23
00:03:15.120 –> 00:03:24.600
The Our Shawn: Take 1.0 for employees who work 40 hours or more per week and point five for anybody works less than 40 hours a week, so you’re going to have to figure out which way of calculating
24
00:03:25.170 –> 00:03:31.620
The Our Shawn: Your average full time equivalent employees works best for you. You may want to bring your account in here now.
25
00:03:32.370 –> 00:03:45.300
The Our Shawn: One of the open questions we have is what do we do with employees that are awful, where we have a real issue here on two sides because we have employees who are potentially on
26
00:03:46.170 –> 00:03:58.110
The Our Shawn: disability programs, whether their state programs and we’ve had some people ask questions specifically about state programs. We’ve also had questions about employees who are
27
00:03:59.100 –> 00:04:06.570
The Our Shawn: You know, going out on their leave and for small employers. Now we have, of course, the cares Act has some provisions for payment.
28
00:04:06.960 –> 00:04:16.290
The Our Shawn: For mandatory leave where essentially the government picks up the lead. Well the issue there is a shift from being an employee of the company. They’re certainly not working. The 40 hours a week.
29
00:04:17.160 –> 00:04:30.990
The Our Shawn: Not on the government payroll, it causes an issue on both the payroll side, but also the full time employee calculations. And what if somebody is out on disability right so now they’re being paid by either a private ensure or maybe a third party.
30
00:04:32.130 –> 00:04:42.840
The Our Shawn: This, we don’t have guidance on and I scrub the SBA websites. I’ve also look for some other articles in the in the mainstream media and there just doesn’t seem to be a good answer for this.
31
00:04:43.230 –> 00:04:46.080
The Our Shawn: So this is one of the missions. We’re going to be in a comfortable spot.
32
00:04:46.530 –> 00:04:55.530
The Our Shawn: I can pretty much tell you will probably get guidance on this at some point. The problem is the guidance may come too late for your real life decision making, right as often is the case.
33
00:04:55.920 –> 00:05:01.170
The Our Shawn: With a lot of these government programs, things get rushed in place and we don’t get answers so
34
00:05:01.710 –> 00:05:09.630
The Our Shawn: We have got a little bit of relief on a big open question which we covered in yesterday’s video, go check it out and Friday trees la chef. You didn’t see it.
35
00:05:10.020 –> 00:05:19.740
The Our Shawn: We talked about PPP loan forgiveness. You can subscribe to the channel look through the videos you’ll find that video PvP or payroll Protection Program loan forgiveness.
36
00:05:20.700 –> 00:05:29.700
The Our Shawn: Where we got a little relief on this alternate covered period, there was a lot of concern and we talked about early, early in the process with the PPP well that
37
00:05:30.360 –> 00:05:36.930
The Our Shawn: With this eight week period. Some employers might have an issue because the payroll dates and they may not get a full
38
00:05:37.230 –> 00:05:52.230
The Our Shawn: Eight weeks of payroll in the eight week period, depending on how the dates fell with their traditional payroll. So some relief, but only for employers that pay bi weekly more more frequently. So people that pay semi monthly twice a month.
39
00:05:52.980 –> 00:05:57.870
The Our Shawn: They’re not getting this relief. So that’s kind of how this relief comes right. It comes scatterbrained
40
00:05:59.010 –> 00:06:05.550
The Our Shawn: I imagine there’s enough employers after I’ve had somebody go on disability or somebody go into the
41
00:06:06.600 –> 00:06:18.540
The Our Shawn: The government payments, the government took over their payroll and we are going to get some relief at some point. And we’re going to get some guidance from the SBA. The problem is for real life decision making. It may be too late.
42
00:06:19.380 –> 00:06:29.220
The Our Shawn: So we really need to think about our plan and what what risk we want to take right as a as a lawyer and of course I’m a lawyer. Generally, I mean I’ve licensed in a bunch of states.
43
00:06:29.610 –> 00:06:38.010
The Our Shawn: Of course I’m not giving legal advice on the show is I always remind folks that we’re just here to give you ideas help you go talk to your counselor be generally educated and
44
00:06:39.510 –> 00:06:47.400
The Our Shawn: So we can’t really look at your specific situation, but as lawyers, we’re always thinking about risk allocation, right, who’s taking a risk.
45
00:06:48.060 –> 00:06:58.260
The Our Shawn: Who’s responsible if things go bad. So here the risk allocation is, do you want to lose potentially some of this PPP loan forgiveness. Now the nice thing is
46
00:06:58.620 –> 00:07:06.870
The Our Shawn: If you look at the way the formulas stack. And it’s kind of an accounting exercise, you know, you may want to talk to your candidate specific situation, but you’ve got three different tiers here.
47
00:07:07.380 –> 00:07:16.980
The Our Shawn: And long story short is you’re in a situation where you’re going to get some forgiveness, even if you don’t make the hurdle, right, you’re going to get some of the money forgiven.
48
00:07:17.400 –> 00:07:25.260
The Our Shawn: But most employers probably want to maximize your forgiveness. You want to get as much money back from the government as you can obviously right so
49
00:07:25.920 –> 00:07:33.540
The Our Shawn: You’re going to have to make a decision right do you bring in another part of another employee maybe at a low rate of pay.
50
00:07:34.290 –> 00:07:42.060
The Our Shawn: To make up for a disabled person right so hire somebody off the street full time doesn’t really matter what they do under these formulas are very weird.
51
00:07:42.810 –> 00:07:54.390
The Our Shawn: But you could potentially bring somebody in to, you know, sweep the floor and you would if they’re working full time for that eight week period you now potentially have another full time employee.
52
00:07:55.260 –> 00:08:04.350
The Our Shawn: You can also look at how the payroll issues going to line up because if the employees being paid by somebody else.
53
00:08:05.100 –> 00:08:15.180
The Our Shawn: They’re probably not within this payroll cost, right, if you look at, it’s really contemplated as payroll paid by the employer. So there’s some people out there.
54
00:08:15.510 –> 00:08:22.830
The Our Shawn: Because of the way things are happening right now with the disability payments with these government programs for paid sick leave related to code at 19
55
00:08:23.250 –> 00:08:31.320
The Our Shawn: There are people out there that are kind of long term employees a company, but they’re not within this payroll costs. So again, another planning opportunity.
56
00:08:31.740 –> 00:08:42.510
The Our Shawn: If you have somebody out there who’s on long term disability and you’re not paying them, you’re not going to get the PPP forgiveness, probably for their payroll. They’re already getting money.
57
00:08:43.110 –> 00:08:49.680
The Our Shawn: Sooner reduce your forgiveness, you could potentially substitute somebody else in for them.
58
00:08:50.640 –> 00:08:56.580
The Our Shawn: Now, one thing we we like to do is go back and look at the spirit of the law right that’s generally how
59
00:08:57.030 –> 00:09:04.710
The Our Shawn: You know, we’re getting tough interpretation questions and the SBA hasn’t given us guidance and you want to know what a judge, jury court government bodies going to do
60
00:09:05.370 –> 00:09:11.460
The Our Shawn: You look at the purpose and the purpose of the PPP loans as we know them.
61
00:09:12.270 –> 00:09:23.790
The Our Shawn: Is to keep people on payroll. So the government wants money going out. That’s the public policy. That’s why we heard the politicians say they supported this
62
00:09:24.150 –> 00:09:32.250
The Our Shawn: So, you know, my best guess right now, today, as we’re recording this. And of course, this is all subject to change as new guidance comes out.
63
00:09:32.640 –> 00:09:47.760
The Our Shawn: Best guess is you know up that payroll. Just don’t pay fake people get real work done. Bring people on to the payroll to get the forgiveness. Right. So play with the numbers use accounting and spreadsheet.
64
00:09:48.840 –> 00:09:58.170
The Our Shawn: Up your payroll ethically, if you can, and use that towards pay pay PPP forgiveness and now if you’re nervous about not getting some relief.
65
00:09:58.590 –> 00:10:08.730
The Our Shawn: Or a full time employee that might be one disability I recommend considering at least hiring somebody temporary to fill that gap. So, you know, this is planning.
66
00:10:09.120 –> 00:10:17.340
The Our Shawn: We don’t have great answers. Unfortunately, this program was rushed out to the market and it’s left these questions open so
67
00:10:18.060 –> 00:10:29.550
The Our Shawn: There are some proposed amendments as we talk right now talking about upping this 75% requirement, allowing people to spend a little bit more money on these line two, three and four issues.
68
00:10:30.630 –> 00:10:39.060
The Our Shawn: Also talking about adjusting that eight week period, particularly for certain industries like restaurants that can’t reopen so now you’re in a position where you’re paying your employees, essentially.
69
00:10:39.750 –> 00:10:46.470
The Our Shawn: To stay at home, which keeps the payroll going, which was the public policy, but doesn’t really help the business side of it.
70
00:10:47.010 –> 00:10:52.530
The Our Shawn: So unfortunately, folks, lot of open questions out there and I bet there’s more so.
71
00:10:53.340 –> 00:11:01.530
The Our Shawn: I would love to get you to drop your questions here at the McBride attorneys law show on YouTube. Let me know what questions you’re have
72
00:11:01.830 –> 00:11:06.330
The Our Shawn: What issues you’re seeing with the PPP burger and what other business issues are you having at this time.
73
00:11:06.660 –> 00:11:16.770
The Our Shawn: Maybe something we’re able to address here are my future done right YouTube channel recommend you subscribe to both if you’re a business owner or business leader because we’re going to bring you tips to help making you
74
00:11:17.730 –> 00:11:20.490
The Our Shawn: A better business owner and leader and giving you the tools you need
75
00:11:20.850 –> 00:11:31.560
The Our Shawn: So drop those comments. Nothing confidential, but I’m looking forward to reading through them and if I get enough questions in area I may do another video for you. Alright folks are Sean broad sign off. Make sure you’re subscribed. I’ll talk with you very soon.