Frequently Asked Questions
The answers given below are opinions and interpretations based on the current guidelines which are subject to change. The writer does not take any responsibility for any changes and the answers are provided for informational purposes only and should not solely be relied upon for future business decisions.
I applied for a PPP loan with my bank. If I subsequently apply for the EIDL, for what items specifically can I use the EIDL funds that do not overlap with the PPP (payroll, rent/mortgage int & utilities)?
Any items outside of payroll, rent/mortgage int and utilities. Review other items on your income statement outside of these items.
What is our timeframe for spending the money from the PPP loan for it to be eligable for forgiveness. 30 days, 90 days, 2.5 months, something different? I have heard June 1st as a date in which payroll will be looked at, but I’m not sure how it works if my payroll is less than my prior year average at that point (it will definitely be over 75% of the loan amount if using a 2.5 month period, so just wondering if that is the time frame SBA will use). Thanks!!
You have 8 weeks to spend the funds from the loan closing date.
Which platform online should we be using to apply?
Each bank has its own application. You should contact your bank.
For best results source a local SBA lender so they can ensure that you have properly applied and provided the correct back up forms.
Are there any special or different ways that this all applies if you are an LLC and DBA?
DBA is based on self-employment earnings and are eligible to apply for the PPP loan this Friday. Your self-employment earnings are indicated on Schedule C of your personal tax return.
Will I have to file my 941 for the 1st quarter this year including paying the taxes or should i defer this if I am applying for the PPP loan?
You should still file by the original due date.
If the owner only gets a minimum w-2 wage, and most of their compensation comes from profits on a LLC corporation, can the profits from the LLC count to the $100k compensation for the owner?
Unfortunately no: the AMOUNT of the loan is based on prior payroll so if you didn’t have that in payroll before, you can’t use that for how much you get approved for. You may, however, be able to increase your payroll once you get approved.
So, IF I wanted to reapply – I would have to wait until this Friday to do that?
If you’ve already applied, you’d have to discuss changing your application with your bank. If you haven’t applied, you can apply ASAP!
I think there is an advantage to waiting to apply if your center is closed. In waiting for closer to re-opening date, you can take advantage of more payroll forgiveness at a time when your tuition is probably down. What do you think?
Assuming funds are still available, that could work. But big question is if $349B (and now another $250B) will last long enough.
Can independent contractors, i.e. freelancers… apply that don’t have employees and don’t pay themselves a “salary,” but take owner draws as they need money.
Yup! Starting 4/10
Can banks decide to go with their customers first instead of those who applied first?
It’s not supposed to work like that – but each bank does have flexibility in facilitating this loan at their own discretion. The law was written in favor of getting the maximum amount of funds out as quickly as possible.
I apologize if i missed it but will these slides be available
What is I am still paying all my employees since we were closed. 3/18 to now. Hope to continue is this wise or will it be too costly.
Business decision first…assume (at this point) that you won’t get the loan forgiven. You should, but assume you won’t. After making that assumption, decide whether to keep employees.
Do you have to continue to pay your staff full time or can you pay for just the hours that they are needed?
Business decision first! Pay your employees for what you need them for. Then analyze how to use the PPPL funds received.
Do you have to use the funds within 2 months?
What banks in GA are processing these loans?
Seek Any Bank that is an approved SBA lender.
On the PPP loan application SBA asked for “Number of Employees” so we included our headcount, which is consistent with the IRS Form 941s. However, on the foregiveness side, they are asking for “FTEs” which is different for our daycare since we have a number of part-time employees. Is this going to be corrected, since this method penalizes us vs. our original head count on the application?
The current guidelines state that your loan forgiveness will be reduced if you decrease full-time equivalent employee headcount. You also cannot decrease salaries and wages by more than 25% for any employee that made less than $100,000 in 2019.
You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15 and April 26, 2020.
We have not heard that this will be changed, however, many aspects of the loan program have changed since the program was announced.
Can an employee collect unemployment if the chose to stay home because they are afraid to come to work?
This is a decision to you as their employer. If a laid off employee chooses for any reason, other than the reasons outlined in Sick Leave and Family Medical leave, to not return when asked by their employer, they may be abandoning their job. In most states, a condition of unemployment is if they have been offered work by their employer or another potential employer that meets their skill set. They must accept that role, or risk losing unemployment.
But here is where rebuilding culture comes in Many former staff have been scared and have great anxiety due to go reason, daily media, government and social media barrage of the damage of interacting with others. Having these staff members return is an effort to reduce their anxiety in that your schools are safe, healthy and clean. You may best start by have the individual come to work, maybe work by themselves to deep clean or work in the playground. Provide access to plenty of hand sanitizer, disinfectant, masks… and you can truly let them know that there is a much lower risk at your school, then at a supermarket or the like because it is a handful of the same people attending.
Is a bonus for hazard pay for those employees who work during the pandemic included in the total payroll amount for PPP forgiveness?
Yes, we believe so. However, if, on an annualized basis, this results in compensation over $100,000 ($15,385 per individual over the 8 week period), this amount would not be forgiven or would reduce the total amount forgiven.
Would this apply to someone who doesn’t want to return because they are high risk?
If the person does not want to return because they are high risk, they would need to seek a Medical Physicians diagnosis and apply under the Sick Leave or the Family Medial Leave. If they can not get a Doctors diagnosis, they may be abandoning their job if it is offer to them and in notifying the department of labor, they may lose their unemployment benefits.
I had laid off an employee and while they were on layoff were tested for COVID. would that qualify under the paid sick leave act or would that be exempt because it happened after layoff occurred?
You should seek your state department of labor regulations on this. States do differ here. Most states say that if someone is diagnosed sick AFTER they are laid off, they are ineligible for sick pay benefits if they have been laid off. This does not stop that individual to attempt to apply for Sick Leave or Family Medical Leave. The rules are not finite here and exceptions may be made.
Does this apply to both parents in a 2 parent family with a 17 year old child?
Yes, it is possible for both parents to apply for leave to be with a 17 year old child, assuming child qualifies (dependent upon the parents, etc…).
As an employer with less than 50 employees I have to apply for exemption with DOL?
The employer doesn’t actually have to submit anything to the DOL, but must be able to substantiate the reason for the exemption:
In general, an authorized officer of the business must determine that:
The provision of such leave would result in the business’s expenses and obligations exceeding revenues and cause the business to cease operating at minimal capacity;
The absence of the employee(s) requesting leave would jeopardize the business due to the employee’s specialized skills or knowledge of the business
There would not be sufficient employees able to run the business if such employees took leave
Is there a form we can use for requesting an accelerated payment from the IRS if we do our own payroll? Can we find it online?
There may be several considerations depending on the type and size of your corporation or sole proprietorship you may be. You should be able to find your answer here:
If a teacher in childcare is asking for FMLA to care for her elementary aged child, however we are offering care said child, does she qualify for FMLA?
No. The employee is only eligible if the employee is unable to work (or telework) due to a need to care for children under 18 years of age, if the school or place of care has been closed, or if the child care provider of such children is unavailable.
Is there additional documentation needed from the employee for us to qualify for the credit?
If this is in regard to the Payroll Tax credit, please review the IRS requirements here:
If laid off and come back do they need to wait the 30 days for the benefits to take place.
No, not if the lay-off occurred because of the public health emergency.
Please define part time workers? How many hours do they need to work to qualify for the $600?
Typically yes. You will want to review your state Department of Labor requirements to qualify under Short-Term Compensation ( STC). This is where a part or full-time employee may return for partial hours, yet still be able to claim unemployment for hours they typically would earn, but can not because the employer is unable to provide them with those hours.
If a furloughed employee chooses to not work after an employee receives PPP loan while the school is still closed and asks staff to work from home, can the employee stay furloughed? And what risks are they taking with unemployment?
Typically, no: If they deny a request to work, especially if it is in their skill set, in their home as you imply and provide them with hours similar to what they previously had. They could be denied unemployment by the Department of Labor if the employer notifies the DOL that the employee was
1) offer a job back
2) the employee denied to return to work. Even if the employer offer part-time hours, the employee may have to accept them based on your state regulations and then the employee can collect remaining hours of unemployment under the Short Term Compensation (STC) provision of the CARES act.
Will they look at person to person match or if we have to hire new staff… as long as we show in the payroll report that we paid out 75% is that sufficient?
As long as FTEs remain the same (or greater) and salaries and wages are not decreased by more than 25% for an employee that made less than $100,000 in 2019, the forgiven will likely not be reduced.
PPP – Do my staff have to be back at work? Or can they work from home? Do they have to work their full scheduled hours
Staff only needs to be on the payroll, it does not matter where they are located.
Individuals do not have to work full scheduled hours, however, for the loan to be forgiven, total FTEs must not be decreased as of June 30, 2020.
If we feel it is not safe yet to open, does it make any sense to use PPP?
This is a business decision you need to make. If you have no payroll, there is no reason to have PPP. Yet if you plan on opening up in two weeks, possibly based on non-essentials starting to return to work, they will need childcare. At that point if you choose to open, PPP would be substantial help to offset payroll cost, Rent and utilities. It will take approximately two weeks from the time an employer submits a application that meets PPP requirements as well as the SBA lender requirements before approval and access to funds. Also, the CARES Act for PPP is only funded today with $350 Billion and there is talk of additional funding but that is not approved as of yet. As of 4/14/ 2020: About $220 billion in loans from the federal Paycheck Protection Program (PPP) have been approved, leaving about $130 billion remaining in the popular but rapidly shrinking fund. Applications were able to first be applied for on 4/3/2020 – At this rate, the funding for this will run out by the end of next week, if the government does not further fund the program.
If you are paying your employees to the end of April, because they are working from home, but now can’t continue to pay past May, once you get your PPP Loan can you use that loan to cover past April payroll? Or is it only the 8 weeks moving forward from the day you get the loan.
It is only the 8 weeks following the date the loan proceeds are received.
When do we have to use this loan. Does it have to be going forward or can it be retroactive after we open if we paid them during closure.
8 weeks following the date the loan proceeds are received.
What if we use PPP but then have to lay off again?
As long as the proceeds were used for eligible costs and program guidelines are followed, the loan is eligible to be forgiven.
Once PPP comes thru how do figure in those who have been collecting unemployment?
Not sure it matters if employees have been collecting unemployment, the purpose of the loan is to get employees back on payrolls. The Pandemic Unemployment Insurance Act, will not charge against the employer insurance but the federal government will reimburse the state.
How can we make good decisions on PPP if they have not decide on the fine print for forgiveness??
This is a question for the SBA. You will want to discuss this question with an approved SBA lender, who is your conduit to applying for these funds. In general, the program is about bringing staff back to work. If you use most of your funds to do that, you should be safe. Your SBA lender will typically be the one to justify the business use. Work close with them and their requirements and it should lower risks.