Practice English Speaking&Listening with: NEW PPP Forgiveness Rules (May 23rd) You Need to Know!

Hey, everybody, I'm Jamie Trull I am a CPA I'm also a financial literacy coach and

profit strategist and typically I'm helping business owners understand their

finances better and be able to manage their cash to be able to make and keep

more money but lately I've kind of pivoted and we're really working on

understanding the stimulus so I've been reading all the things for you guys

keeping up with all of it so that I can help you understand the things that are

changing the things that are being clarified if you got this PPP loan right

a lot of you guys got it and you were excited to get it and now you're like

wait what do I have to do to make sure that this thing gets forgiven so that's

really what I have been working on and want to bring to you today so last night

some additional clarifications came out in the form of a new interim final rule

on May 22nd so it came out last night which was Friday night

remember the Friday before that May 15th the new forgiveness application for PvP

came out from the Treasury so I guess that's the new trend is they're gonna

put guidance out on Friday night and then leave for the weekend which really

makes for a fun weekend for accountants so I wanted to make sure to get this

video out to you guys so that you could see it and understand exactly the

important things that are coming out of it so I'm they're really run through

this and go through the things that are most important in this new interim final

rule for you to understand also if you've not watched my video on the

walkthrough of the application for PPP please go and do that go ahead and

subscribe to my channel and then go and look through the videos I've got tons of

them I've got videos on unemployment I've got videos on the eidl loan i've

got videos a ton of videos on PPP so if any of those apply to you there's plenty

of videos go check them out but in the meantime let's jump straight into what

the new rules are or the new clarifications anyway that came out last

night okay so importantly anytime that you are going to try to look up any of

the official guidance from the Treasury the best place to go is Treasury gun so

I'm gonna show you exactly where I'm going to get there okay so you can see

this red bar here for small businesses seeking direct relief click that and

then scroll down and you're gonna see under tools all these different things

and you'll notice under rules there are about a million different

interim final rules okay so the one that we're looking for and you can usually

tell they usually put the dates next to them so we're going to jump over here to

interim final rule on loan forgiveness that one sounds good right so we're

gonna jump on in here okay so this thing is 26 pages I'm not gonna go through all

of it nobody wants me to read all that to you but I'm just gonna bring out the

things that are most important okay so we're gonna scroll on down and we're

gonna start with page seven okay this is where it starts to get good now go ahead

and take a look at all of this and read through it it's really fun bedtime

reading it'll help you sleep really well but here let's get into question number

two because I think this is a question we have been talking about so one of the

questions is what is the general process to obtain loan forgiveness okay so to

receive loan forgiveness a borrower must complete and submit the loan forgiveness

application to its lender obviously right we know we got the application

you're gonna have to submit that to the lender in general that's gonna be after

your eight-week so I know a lot of you guys are ready to jump the gun and you

really want to get it forgiven but the truth of the matter is you're gonna have

to wait until there's a process up and running from the banks and they just

don't have that yet so once that happens your lender will probably let you know

hey we're open for applications but then it says as a general matter the lender

will review the application make a decision so it's gonna be up to your

bank not the SBA in most cases now if your loan was over two million good for

you but and your loan will probably have to also be reviewed by the SBA in that

case but in general most people's loans are just going to be reviewed by your

bank that you applied through or perhaps a partnering think that they're working

with depending on that bank so you can see here it says the lender has 60 days

from receipt of a complete application to issue a decision so again it's kind

of like that rush rush rush and wait that's sort of what we're dealing with

in all of these programs this rush to get everything in and then wait because

it's going to take a while for the banks to get through this so know that as soon

as you get that application in it's gonna take some time for the bank to

actually go through it now some may come up with a process to do this faster than

others but we're it's just going to depend so

expect that that's gonna be overnight so this just kind of goes into what happens

if the lender determines that the borrows title then you're gonna get

forgiveness and the SBA is gonna essentially come back and they're gonna

give the bank back that money right they're gonna reimburse the banks so

they'll either decide you're a hundred percent forgiven or they'll decide

you're partially forgiven either way you'll figure that out and then you you

can settle up then or the rest can become a loan over two years at one

percent interest if any of it is not forgiven okay so let's go check out the

next page just real quickly because this has been a point of surprise I think for

some people a lot of people applied for both EIDL and PPP and then they were

surprised when things came out saying hey by the way if you did both your Eidl

advance the grant not the loan if you got the loan that separate but if you

have if you got a grant like that free money from the EidL the one thousand

dollars per employee if you got that it's gonna be subtracted off of your PPP

forgiveness if you got PPP okay so at the end if you if there was a portion of

PPP you would have been forgiven um figure out the amount of PPP you're

gonna be forgiven then subtract that EIDL advance from it so you can see here

it specifically calls that out okay okay so now we're gonna jump into one part

that I thought was probably the most interesting of all and maybe the most

impactful in a good way for you if you've been somebody struggling with I

don't know how I'm going to hit that 75 percent threshold for PPP for payroll I

don't know how I'm gonna make sure that I that I get enough payroll in to get

this thing forgiven let me show you something that's gonna make you excited

okay so go to question three payroll costs eligible for loan forgiveness when

must payroll cost be incurred endure paid to be eligible for forgiveness so

the assumption to this point it's been a little bit fuzzy in the guidance that's

been shown by Treasury too now but the thought was you were gonna have to both

incur and pay those expenses in the eight weeks for them to count meaning no

back pay no pre payments and it really has to be just that

eight weeks worth of payroll that was incurred during that time that would

count okay let me to show you something though

so this one kind of made me smile a little bit to read through in general

payroll cost paid or do you see that or incurred during the eighth consecutive

week covered period are eligible for forgiveness borrowers may seek

forgiveness for payroll costs for the eight weeks beginning on either and this

is where the new application that came out last week did give kind of an option

to do an alternative payroll cycle so you can either start you know your

payroll eight week count from the day you got the money or you can start that

count from the first day of your next pay period because sometimes that's a

little bit easier right and I'll walk through an example of what that kind of

means but ultimately you have a choice there of which one you want to use only

for payroll you can't choose that for the other the others for the other for

non payroll costs it starts right the day you get the money that's your

cupboard period but for payroll you get a little bit of a choice but the big

thing here guys is or paid or incurred what does that mean well let's say I

think a lot of people have been worried okay well I've got a payroll run the

payroll run paid during the eight weeks okay so let's say let's do an example

let's say that you normally pay your normal payroll runs for May would be May

1st through the 14th right that's a pay period and then that pay is done kind of

a week in arrears which is typical right is that the pay for May 1st through 14th

comes through on the 21st and then May 15th through the 28th is pay and say

June 4th ok so in those cases people were wondering

okay what happens if my loan is funded May 17th right so again we had pay

period from the 1st to the 14th which gets paid on the 21st the 21st is after

you got the loan right you got the loan but it was paid for a pay period from

before the loan so the question was does that count or not I paid it during the

pay period but wasn't really related to the pay period or sometimes maybe it was

partially related to the pay period to make things even more complicated right

and the answer according to this now is paid or incurred which means as long as

you paid it during that time for that should count if it was payroll you

paid during the eight weeks that would count towards your forgiveness even if

it's payroll for a previous period okay that is huge that is that is big because

that opens up a lot of people are trying to figure out how to get you know all of

this in there and and the truth is now you could get an extra pay period in

really pretty easily without having to do a whole bunch of finagling to do it

you could have an extra pay period that would fall in so you'll need to kind of

map it out I suggest getting out like an actual calendar and circling your dates

and Counting out your eight weeks you're 56 days that you have that PPP and

looking at those two options of either start payroll period the day you got it

or start the payroll period on the first day of your next payroll period so let's

say again my payroll period is May 1st through the 14th paid on the 21st right

or May 15th through 28th paid on June 4th well if I get them the loan on May

17th and that's in the middle of a pay period

I could technically go you know what I'm gonna wait till the 29th right the first

day of that next pay period to to actually use this right to start my my

eight-week period so I would actually literally print a calendar circle all

your dates here's the days that this would be due here here's the time period

right and figure out what makes the most sense for when to start this loan when

can you compact the most amount of money into it to make sure you can maximize

forgiveness okay there is some strategy here

additionally something that they came out with was I think it's on the next

page here if payroll costs are incurred during this eight-week alternative

period covered period and paid after the end of the alternative payroll covered

period such payroll costs will be eligible for forgiveness if they are

paid no later than the first regular payroll date thereafter okay so what

this is essentially saying is that if you if you incurred okay if you actually

incurred those expenses but you hadn't paid it yet right because a lot of times

payment is in arrears so it may payroll period might have fallen during the

eight weeks but you hadn't yet paid that payroll that can count okay so you

can actually add that in just the portion that falls between the eight

weeks but you could add that in I still think it could be helpful to run a paper

run on the last day of your eight weeks and the reason that I say that is

because if you don't you're probably gonna be stuck with the next payroll run

after is probably gonna be partially forgiven and partially not and that's

gonna be a little bit difficult to figure out so I would run a payroll run

either on the last day that throughs you all the way up or even the next week but

that goes through just the last day that you had that eight weeks okay so I think

that's gonna be the strategy that's gonna work the best rather than having

to figure out what portion of the the next payroll run after the eight weeks

was up was related to the eight weeks and what portion wasn't if you can

cleanly kind of maybe do a bonus payroll run to make sure there's a clean cut off

I think that would be helpful but it's not something that's required but that

gives a lot of flexibility so that means you can either pay it or incur it during

that timeframe and it's gonna count you guys that is really big and I think that

this is the treasury's way of trying to give a little bit of flexibility around

these rules and meeting them because there has been some pushback on the

eight weeks there's been some pushback on the seventy-five percent payroll rule

there are some things in Congress depending on when you're watching this

make sure I'll I'll update below if anything has been passed by Congress

because that is something that they're looking at is extending the time period

and and changing the seventy-five percent threshold for payroll so if that

changes obviously you know some of this will change but I think this is

Treasury's way of giving a little bit of more flexibility here without having to

do legislation to do it so I think that's a really good situation that if

you're strategic you can figure this out now I'm working on a payroll tracker as

well a PPP tracker should I say and it is going to basically complete your

entire application for you you're gonna fill out things it's got really good

instructions around what you need to fill out and it will help you work

through a lot of these calculations so go grab that balanceCFO.com/ppptracker

is where you're gonna find that a

that is gonna be super helpful for you when you are doing this work okay so

let's see what else we've got in here that's interesting to point out okay so

you can see here on this page now it says our salary wages are Commission

payments to furloughed employees bonuses or hazard pay

during the covered period eligible for loan forgiveness we'd always been

assuming that the answer was yes and they have confirmed here that yes indeed

that counts as payroll so again if you are in that spot where you're like I

don't know how I'm gonna get you know meet these 75% rule you can pay a lot of

people are paying hazard pay to their employees

maybe bonuses during that time period all of that counts now I'll get to it in

a minute but there are some rules around owner pay though so this is for your

employees you can do this but not necessarily for yourself okay okay so

here it is are there caps on the amount of loan forgiveness available for owner

employees and self-employed individuals own payroll compensation yes essentially

what all of this is gonna say is yes the amount of loan forgiveness requested for

owner employees and self-employed individuals can be no more than the

lesser of 850 seconds of 2019 compensation 850 seconds that's take

your 2019 compensation divided by 52 x 8 for if you're a sole proprietor or an

LLC that's gonna be your Schedule C net profit line 31 divided by 52 x 8 if you

are a S corp that's or C Corp that's gonna be your w-2 wages from 2019

divided by 15 52 x 8 that is your limit for wages okay and then there's a little

bit it does talk down here also about how it works for general partners

they're also capped at 2019 that's calculated a little bit differently but

basically this will tell you exactly how much you can pay your self and you are

gonna be capped you can't basically have a windfall that's what they're trying to

avoid right is you to be able to just get forgiveness by paying yourself more

money they want this money to go back into employees pockets not necessarily

for owners ok so don't get caught up in that ok so this also gave guidance on

non payroll so remember there's only couple of types of expenses that

non-payroll cost that we can use that on it can be rent utilities business

mortgage interest that's really it I mean those are really the main things

that you can use this on that are non payroll in nature and get forgiven so

let's look at what it says about that so for non payroll a non payroll cost is

eligible for forgiveness if it was paid during the covered period or y'all love

being the or right let's pick up on the or here or incurred during the covered

period and pay down her before the next regular billing date even if the billing

date is after the covered period think about utilities here that's a really

good example of this right where utilities are usually billed in arrears

so if that's the case and you pay a utility bill maybe you got the loan May

5th and May 15th you pay to utility bill but that utility bill related to April

the question was can you include that because April wasn't part of your

covered period yes paid or incurred okay doesn't have to be incurred during that

time it's fine to pay to back pay some of those bills if you still have them if

you haven't paid them yet okay so that's really important and then as far as

incurred you can also then let's say your May right you're gonna pay your May

one in June and you're gonna tear your due one in July well by the time you pay

that June one it's probably after you're covered period but as long as it was

incurred during that timeframe similar to payroll you would get to count it

alright so only the time period you might have to do a little bit of

calculation on your utility bill at that last that last utility bill to come up

with the amount you can include but you can add that in all right so you might

be able to get easily three payments in um theoretically the question here is

can you prepay right what are the rules then around Pete prepay can you prepay

rent can you prepay utilities right there is nothing in here that says you

can't the only thing that this actually goes into and says that you cannot

prepay take a look here you can see it are advanced payments of interest on

mortgage obligations that's the only thing that tells you you can't prepay

your business mortgage interest right so but it doesn't say anything about rent

utilities so to me that says yeah you probably can prepay those things if that

is something that that you can do that you can work out with your landlord or

that you can work out with your utility company if you need more cost to be

incurred during the eight weeks okay so that is a great thing as well and then

the next several sections here go into the reduction to loan forgiveness amount

okay so what does that mean there are a lot of rules and this is probably the

most complicated part about applying for PPP forgiveness are going to be the

rules around the fte calculation your full-time equivalent and the rules

around your salary and wages reduction there's like a essentially a calculation

of how much you might have to reduce if you don't hire people back at the same

wages as before ie the same salary or the same hourly rate like twelve dollars

per hour before then hire them at least at twelve dollars an hour or at least

don't decrease it by more than 25 percent so there's a lot of calculation

that is involved in that that is one you're gonna want this spreadsheet you

guys I promise you it's gonna make your life easier

balanceCFO.com/ppptracker we are currently working on putting through the

changes related to this so go ahead and get on the list to sign up it will be

coming out in the next couple of days depending on when you're watching this

video it may already be out there so make sure you sign up and get that

tracker because it's going to simplify all of that and I'm not gonna read

through all these pages because literally the next 10 pages or so are

all of those specific rules but I do encourage you to go read it and get a

feel for it and then get the tracker and you know take a relief because it's

gonna it's gonna really help you figure all of that out okay okay so that's

really the update that I wanted to be able to give you guys today I thought it

was really important to come here and make sure that you are aware of some of

these important changes going on make sure that you're following me subscribe

to this channel join my group it's up on the screen right now balancedCFO.com/group

it's called financial literacy for women business owners it's

a free Facebook group I'm answering everybody's questions on all things

stimulus right now it's a stimulus party in

so make sure that doesn't sound like the most fun type of party but make sure you

join that because you will be able to get a lot of great content it's open to

men as well despite the name and I would love to see you over there and I'll see

you guys on my next video bye bye