ppp loan update · 5/5/2020 · maximizing ppp loan forgiveness after the new sba interim final...
TRANSCRIPT
Presented by:
Brandon Ketron
Alan Gassman
Featuring the amazing:
Kevin Cameron, MBA, CPA
Kevin Cameron
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion
They’ve Done It Again!
Sunday, May 24, 2020
11 AM to 11:30 AM ET
(30 minutes)
A Leimberg Information Services Webinar Presentation
MAXIMIZING PPP LOAN FORGIVENESS AFTER THE NEW SBA INTERIM FINAL RULES ISSUED MAY 22ND
TIPS, TRICKS AND STRATEGIES FOR CPAS, LAW FIRMS AND OTHER ADVISORS TO SURVIVE AND THRIVE
DURING THIS CRISISINCLUDES 30 MINUTES OF QUESTIONS AND ANSWERS
Tuesday, May 26, 202011:30 AM to 1 PM EDT
(90 minutes)Presented by:
Brandon Ketron
Alan Gassman
Featuring the amazing:
Kevin Cameron, MBA, CPA
Kevin Cameron
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Copyright © 2020 Gassman, Crotty & Denicolo, P.A.
05.24.2020 PPP Loan Update: Friday, May 22nd SBA Regulation Discussion
They’ve Done It Again!
Thursday, May 28,
2020
Alan Gassman presents:
What Clients Need To Know About Bankruptcy
from 12:30 PM to 1 PM ET
Saturday, May 30,
2020
Alan Gassman presents:
Creditor Protection For Physicians
from 9 AM to 9:30 AM ET
Thursday, June 4,
2020
Brandon Ketron presents:
Section 199A And Related Income Tax Planning
from 12:30 PM to 1 PM ET
Saturday, June 6,
2020
Alan Gassman presents:
Planning For The Single Physician
from 9 AM to 9:30 AM ET
Thursday, June 11,
2020
Christopher Denicolo presents:
Planning for S Corporations
The Basics, Tricks and Traps
from 12:30 PM to 1 PM ET
UPCOMING FREE WEBINARS FROM OUR FIRM
3
Copyright © 2020 Gassman, Crotty & Denicolo, P.A.
05.24.2020 PPP Loan Update: Friday, May 22nd SBA Regulation Discussion
They’ve Done It Again!
UPCOMING FREE WEBINARS FROM OUR FIRM
Thursday, June 18,
2020
Christopher Denicolo presents:
Understanding Charitable Remainder Trusts
Add New Tools to Your Belt
from 12:30 PM to 1 PM ET
Thursday, June 25,
2020
Ken Crotty presents:
SCRAT
from 12:30 PM to 1 PM ET
Thursday, July 2, 2020
Ken Crotty presents:
Gift Tax Return Tips and Traps
from 12:30 PM to 1 PM ET
Thursday, July 9, 2020
Ken Crotty presents:
LLC Drafting Tune Ups and Checklist
from 12:30 PM to 1 PM ET
Thursday, July 16,
2020
Ken Crotty presents:
Inheritance Trust Implementation and Planning
From 12:30 PM to 1 PM ET
Thursday, July 23,
2020
Ken Crotty presents:
Estate Tax Return Tips and Traps
from 12:30 PM to 1 PM ET
4
For more information, email:[email protected] 55
6Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Time Topic Speaker Topic Speaker
8:00-8:10 Greeting Dean and Director
8:10-9:20Current Developments of importance to estate
planners.Howard Zaritsky None
9:20-10:20 Current Developments (continued) Howard Zaritsky None
10:20-10:35
Break Break
10:35-11:35
To Gift Or Not To Gift: Balancing Income and Transfer Tax Benefits For Couples Worth
Between $12 Million to $22 Million Jeff Chadwick
Rescue Planning For Existing CLATs Where Lower Asset Values Will Deplete Principal Reducing Or
Eliminating Estate Plan Benefits
Notre Dame Advisory Board
11:35-12:35
Avoiding The Estate Planning “Blue Screen Of Death” With Competent And Ethical Practices
(Ethics)Gerry Beyer
Defensive Practices Because Nothing Is Safe: How Practitioners
Can Be Safer And Reduce Malpractice Risks (Ethics)
Sandy Glazier Howard Zaritsky
Marty Shenkman
12:35-1:50 Luncheon
1:50-2:50Turning Off Grantor Trust Status: Mechanics, Tax Implications, Effect On Entities, Abusive
Transactions, And State Law ObstaclesDavid Kirk
Estate Planning To Obtain The Best Economic Outcome For Beneficiaries of IRA And
Retirement Assets
Steve Trytten
2:50-3:50 Michael GordonCreative Planning With Charitable
Remainder Trusts: You Will Flip When You See This
Michael MulliganJohn Grzybek
3:50-4:05 break break
4:05-5:35
Perspectives On Planning For Personal Property: Collectibles, Philanthropy, Auction
Houses, Income Taxes, And The Next Generation
Kim KaminAdd OthersShenkman, Moderator
None
Agenda
Thursday, October 29, 2020(Wednesday)
3:30 pm to 5:30 pm
A Comprehensive Review of the SECURE Act And How To Draft For What Is Still Not Clear.
Christopher Denicolo
7Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Time Topic Speaker Topic Speaker
Track A Track B
8:00-9:00CARES Act Loan Forgiveness, Tax Issues and
Related Aftermath of COVID-19David Herzig
Alan Gassman
An Estate Planning Roadmap for 2020 and 2021
Marty Shenkman
9:00-10:00Bob Keebler
Foreign v. Domestic: Which Jurisdiction Is Right For Your Client Considering Asset
ProtectionGideon Rothchild
10:00-10:15 Break
10:15-11:15Life Insurance Best Interest Pressures And Evaluation Other Factors Advisors Need To
Consider
Rebecca RyanBarry Flagg
Todd Steinberg, Moderator
The Land of Oz: A Hard And Candid Look At Opportunity Zone Tax Incentives: Would You Make The Investment If There Were No Tax
Incentives?
Jay Darby
11:15-12:15Todd Petit
Todd Steinberg, Moderator
I Have A Lot of Investment Expenses: What Is And What Is Not Deductible
Louis Harrison
12:15-1:15 Luncheon Luncheon
1:15-2:15Navigating Common Trustee Liability Exposures
And Defensive Steps To Take In Advance
Stacy SingerTom Abendreth
The Income Tax Impact Of The New Transfer For Value Regulations: What Is No Longer A
Safe Harbor For Transfers Of A Life Insurance Policy
Stuart KohnAdam Garber
2:15-3:15Securing Client Data And Teleworking: Ethical
Concerns and Practical Tips (Ethics)Karin Prangley
The Mine Fields Of The Lawyer As A Fiduciary: Do You Know How To Navigate
Them? (Ethics)Paul Hood
3:15-3:30 Break Break
3:30-4:30Variations On A Theme: The Uniform Trust
Code In The Midwest And States Considering Its Adoption
Susan BartBDITs and BDOTs: The Basics, Concerns To
Evaluate And Best PracticesAnita Sarafa
4:30-5:30Basis Planning And Income Tax Deferral While A
Client Is Living Or For Appreciated Assets Owned By Trusts Not Exposed To Estate Tax
George Karibjanian
Defined Value and Price Adjustment Clauses: Background, How to Mitigate the Need to Use Them, and How to Handle an
IRS Audit
Chris Siegle
Agenda
Friday, October 30, 2020* Ethics credits are tentative, depending on the accrediting bodies for each state.
Quotes of the Day
Be careful about reading health books. You may die of a misprint. Mark TwainRead more at https://www.brainyquote.com/authors/mark-twain-quotes_2
The best way to cheer yourself up is to try to cheer somebody else up.Read more at https://www.brainyquote.com/authors/mark-twain-quotes
Let us make a special effort to stop communicating with each other, so we can have some conversation.Read more at https://www.brainyquote.com/authors/mark-twain-quotes_5
I was gratified to be able to answer promptly, and I did. I said I didn't know.Read more at https://www.brainyquote.com/authors/mark-twain-quotes_6
Why shouldn't truth be stranger than fiction? Fiction, after all, has to make sense.Read more at https://www.brainyquote.com/authors/mark-twain-quotes_6
There are basically two types of people. People who accomplish things, and people who claimto have accomplished things. The first group is less crowded.Read more at https://www.brainyquote.com/authors/mark-twain-quotes
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9Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
How Much you Can Borrow?
“The 2.5x Test”
How Much Can Be Forgiven?
“The 8 Week Expense Test”
What You Can Use the Funds For From Feb 15th Through June 30th
(No limitations after June 30 under present law)
2.5 Times Monthly Average Payroll Costs for the prior 12 months.
Payroll Costs include:• salary, wage, commission, or similar
compensation• payment of cash tip or the equivalent• payment for vacation, parental,
family, medical or sick leave• allowance for dismissal or separation
(severance pay)• payment required for the provisions
of group health care benefits, including insurance premiums
• payment of any retirement benefit• payment of state or local tax
assessed on the compensation of employees
1. Payroll Costs including those shown in left column
2. Payment of interest on mortgage obligations incurred prior to February 15th, 2020
3. Rent obligations for leases entered into prior to February 15th, 2020
4. Utilities (including payment for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020)
5. The amount that can be forgiven is reduced by the $10,000 EIDL grant
1. Payroll Costs including those items shown in left column
2. Payments of interest on any mortgage obligation (but not principal payments)
3. Rent
4. Utilities
5. Interest on any debt obligations that were incurred prior to February 15th, 2020
• Expenses allowed, but do not reduce indebtedness.
(1) Interest on non-mortgage debt obligations even if incurred prior to February 15th, 2020
(2) Interest payments on mortgage debts after February 14, 2020.
(3) Rent obligations entered into after February 15, 2020.
Paycheck Protection Program Loans
10Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
How Much you Can Borrow?
“The 2.5x Test”
How Much Can Be Forgiven?
“The 8 Week Expense Test”
What You Can Use the Funds For From Feb 15th Through June 30th
(No limitations after June 30 under present law)
2.5 Times Monthly Average Payroll Costs for the prior 12 months.
• 2019 IRS Form 1040 Schedule C line 31 net profit amount of the independent contractor or sole proprietor – but no exceeding $100,000 per annum ($8,333 per month x 2.5 = $20,833).
PLUS
For expenses for non-owner employees (but not for expenses that benefit owner):• 2019 IRS Form 941 Taxable Medicare
wages & tips (line 5c- column 1) from each quarter
• Any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips
• 2019 employer health insurance contributions (health insurance component of Form 1040 Schedule C line 14)
• Retirement contributions (Form 1040 Schedule C line 19)
• state and local taxes assessed on employee compensation
1. Owner compensation replacement, calculated based on 2019 net profit-not exceeding $$1,923 per week ($100,000 divided by 52 = $1,923. $1,923 x 8 =$15,385.)
2. Payroll Costs including those shown in left column
3. Payment of interest on business mortgage obligations incurredprior to February 15th, 2020 to the extent deductible on Schedule C.
4. Rent obligations for leases entered into prior to February 15th, 2020 to extent deductible on Schedule C.
5. Utility payments under service agreements dated before February 15, 2020 to the extent they are deductible on Form 1040 Schedule.
1. Owner compensation replacement, calculated based on 2019 net profit.
2. Employee payroll costs if you have employees.
3. Mortgage interest payments (but not mortgage prepayments or principal payments) on any business mortgage obligation.
4. Interest payments on any other debt obligations that were incurred before February 15, 2020 (such amounts are not eligible for PPP loan forgiveness).
5. Business rent payments.
6. Business utility payments.
PPP Loans for Independent Contractors and Sole Proprietors
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!11
1. We need to understand these and be prepared to file the application immediately following the end of the eight week period before the rules change for the worse.
2. Application provides borrowers with an alternative eight week period for measuring payroll costs that aligns with pay periods, and payroll costs incurred but not paid during the Borrower's last pay period are eligible for forgiveness if paid on or before the next regular payroll date, even if such date is outside of the eight weeks.
3. Necessity is still required, and compliance with rules in place must be reaffirmed on Loan Forgiveness Application.
4. It appears that retirement plan contributions may be counted in their entirety, however retirement plan contributions for sole proprietors, independent contractors and partners in a partnership may not be counted.
5. It may be possible to pay rent that has been deferred from prior months, or pre-pay rent.
6. Consider rehiring to have the same number of employees on June 30 as the business had on the pre virus test date chosen.
The Top 12 Revelations from the PPP Loan Applicationand Instructions
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!12
7. Employers with a significant number of employees who work under 20 hours per week may elect the new “1.0 or .5 measurement.
8. Non-payroll costs can be counted if incurred during the eight week period and paid on or before the next billing date, even if the billing date is outside of the eight week period.
9. The 75% test is not a cliff - it limits rent, interest, and utilities (the non-payroll costs) to be no more than 1/3rd of the sum of payroll costs (including health insurance, retirement plan amounts, and state and local taxes).
10. Rent and mortgages include lease arrangements and liens on non-real estate assets
11. You may not be able to count an owner in the numerator or denominator of the reduced employee fraction.
12. You have to run the numbers!
The Top 12 Revelations from the PPP Loan Application and Instructions, Cont’d
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!13
Speaking of Necessity
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!14
While the SBA has indicated that it will not question necessity or refer
necessity issues to other agencies, the Cares Act statute says that the
loan must be necessary to support the ongoing operation of the
business and the Department of Justice and Whistle blowers will not
be bound by the SBA Guidelines.
Necessity Is Still Necessary
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!15
SBA Issued FAQ 46
On May 13, 2020 –
“Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the
necessity of the loan request in good faith.”
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!16
SBA Issued FAQ 46 on May 13, 2020
Question 46 published May 13, 2020.
46. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?
Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns…
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!17
SBA Issued FAQ 46 on May 13, 2020, Cont. Question 46 published May 13, 2020.
46. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?
Answer: …Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!18
May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises| Alan Gassman, Contributor
Forbes Post May 23, 2020
Just last night, the SBA gave new weekend plans to those of us who advise borrowers and banks on how to plan for and understand the PPP loan forgiveness rules and process.
The new Interim Final Rules consist of 26 pages that build upon what we learned from the Loan Forgiveness Application and Instructions, which cleared up several items, and resulted in several questions, and now some have been answered. A second set of Interim Final Rules, also released on May 22nd and consisting of 19 pages, provide guidance with respect to the SBA loan review process as well as borrower and lender responsibilities associated therewith.
The Application and Instructions are discussed generally in my web post of May 16th, and in great detail in Toni Nitti’s web post of May 16, 2020. I would like to thank Brandon Ketron, CPA, JD, LLM for helping me
to understand these new pronouncements. Brandon and I are teaming up tomorrow with CPA Kevin
Cameron to discuss these new rules in a free 30 minute webinar at 11 a.m. EDT. Please feel free to email me
at [email protected] and put “webinar” in the RE/SUBJECT line, and we will send you an invite
to view this live or to view a replay.
Taking the 26 pages of double-spaced regulatory language that was issued last night page by page, and
including things we already knew or thought we knew, I noted the following:
19Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
1. Time is of the Essence. The Interim Final Rules indicate that the first PPP loans were disbursed after April
3rd, so many borrowers are already in their 6th week of spending to facilitate forgiveness, and certainly in
need of this guidance, which presumably can be relied upon by borrowers and lenders to determine
forgiveness amounts for Loan Forgiveness Applications that are filed before the rules change again!
2. Better Defined Terms. The Interim Final Rules reiterate that borrowers will be eligible for forgiveness in
an amount equal to “the following costs incurred and payments made during the covered period.” These
“costs and payments” include (1) Payroll Costs, (2) interest on mortgage obligations, (3) rent, and (4)
utilities.
Payroll Costs include “salary, wages, commissions, or similar compensation, cash tips or the equivalent (based
on employer records of past tips, or, in the absence of such records, a reasonable, good-faith employee
estimate of such tips), payment for vacation, parental, family, medical, or sick leave, allowances for separation
or dismissal, payments for group health care coverage, including insurance premiums, and retirement, as well
as payment of state and local taxes assessed on compensation of employees.”
The above language is directly provided in Footnote 2 of page 6, and seems to tell us the following:
(i) Tips About Tips. Employers who have employees that receive tips will have the loan forgiven for tips provided
during the “covered period,” even though these come from customers, and not the employer, so the more the better.
The employer should keep records of tips, or if there are no such records, can use “a reasonable, good-faith,
employee estimate of such tips.”
The employer should keep records of tips, or if there are no such records, can use “a reasonable, good-faith,
employee estimate of such tips.”
20Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
The language indicates that this is for cash tips or the equivalent.
We are not sure what “the equivalent” means. Maybe gift cards and other items of value given to employees will
qualify.
(ii) Always Read the Footnotes. The same Footnote refers to “employee benefits consisting of . . . retirement,”
with no definition given to what retirement means. We know that this includes tax qualified 401k, pension, and
profit-sharing plans, but it is not clear whether it would include the contribution of stock to an employee stock
ownership plan, or a non-tax qualified retirement plan, such as a “top hat plan” for highly compensated employees,
or a “rabbi trust,” where money is set aside contractually and in a separate fund, but not considered to be tax-
deductible by the employer or included in income by the employee.
3. Planning for Interest, Rent and Utilities. Besides the above discussion of “payroll costs,” the Interim
Final Rules review and give some new specificity and clarity to the other three categories of payments that are
countable to determine the total amount forgiven, being interest, rent and utilities.
The Interim Final Rules confirm that the borrower can reduce what is owed back on the loan by the amount of
any “Interest payments on any business mortgage obligation on real or personal property that was incurred
before February 15, 2020 (but not any prepayment or payment of principal).”
The above language is consistent with the Loan Forgiveness Application Instructions, which indicate that
interest on indebtedness secured by “personal property” (items that are not real estate) can be forgiven on debt
that “was incurred” before February 15, 2020.
21Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
Presumably, this means that the debt had to be in place before February 15, 2020, but not necessarily that the
debt had to be secured by a mortgage or security interest in the real or personal property, and there does not
appear to be any prohibition against increasing the interest rate payable on debt that existed before February
15, 2020 to a fair market value interest rate when related parties are involved.
In addition, if there was an agreement to extend debt that was made on or before February 15, 2020, and the
loan was made or increased after that date but before the beginning of the eight week period, then it would
seem that the actual amount of interest incurred during the eight week period should count towards what is
forgiven.
Borrowers should exercise caution in amending related party debt or lease agreements, as the SBA could
disagree with this position. This could also be used as a sword by the SBA against the borrower in the event of
an audit because if the borrower could afford to pay a related party higher interest or higher rent, then there
may be a question as to whether the loan was really necessary in the first place.
4. Timing is Everything. Page 13 of the new Interim Final Rules tells us that advance payments of interest
are not eligible for loan forgiveness because the CARES Act’s language specifically excludes “prepayments”
of interest owed on indebtedness.
On the other hand, interest that has accrued before the beginning of the eight week period and paid during the
eight week period would seem to be covered based upon the language of page 12 of the new Interim Final
Rules, which reads as follows:
22Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
A nonpayroll cost is eligible for forgiveness if it was:
(i) Paid during the covered period; or
(ii) Incurred during the covered period and paid on or before the next regular billing date, even if the
billing date is after the covered period.
It would therefore appear that interest that is accrued and owed as of the day before the beginning of the 56
day period that follows receipt of the first loan proceeds can be paid during the eight weeks to qualify for loan
forgiveness.
Further, interest accrued during the eight weeks will be included in the forgiveness amount, as long as it is
“paid on or before the next regular billing date” which follows the eight week period.
The rules generally provide that rent is treated the same way, and can be based upon the rental of real estate or
non-real estate assets “under a Lease Agreement in force before February 15, 2020.”
It does not appear that the property had to be in place or actually being leased as of February 15, 2020, as long
as there was “a Lease Agreement in force” before that date that provided that the lease arrangement would
occur. For example, a “to be” lessor and a related party may have agreed under a binding written or oral
agreement that an asset would be made available and provided to a lessee by a lessor.
There is also no apparent prohibition against increasing the rent being paid to fair market value. Many related
party leases are at below fair market value in order to avoid state sales or use taxes that would otherwise
apply. The Interim Final Rules do not appear to prevent amending leases to provide for fair market value
rental from the effective date of the amendment forward. Fortunately, for rent there is no “prepayment”
23Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
exclusion under the language of the CARES Act, so tenants will have greater forgiveness if they can defer
paying rent until the beginning of the eight week period so that they can have forgiveness on the rent
“paid during the covered period” and also the rent incurred during the eight week covered period “and
paid on or before the next regular billing date, even if the billing date is after the covered period.”
Again, any rent that is deferred from before the beginning of the eight week period must be paid during
the eight week period in order to be credited.
5. The Utility of Utility Payments. The same rationale applies for “business utility payments for the
distribution of electricity, gas, water, transportation, telephone or internet access for which service began
before February 15, 2020.”
This clause tells us that “utilities” means an expense “for the distribution of electricity, gas,
water, transportation, telephone, or internet access”, whatever the heck that is.
Certainly, these words include cell phone service and business costs of “internet access,” but not costs
paid to third parties for services provided on the internet, such as Netflix, even if used in the business,
Cloud services and other computer-based or third party provided expenses that are incurred “on the
internet”.
Like rent, utility costs that are incurred before the eight week period can be paid during the eight week
period in order to be included in the forgiveness amount.
24Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
6. Enough Already About the 75% Rule. The Interim Final Rules indicate that the total costs for interest,
rent and utility payments “cannot exceed 25% of the loan forgiveness amount.” This is another way of saying
that 75% of the total forgiveness has to be based upon expenses paid for payroll, including health insurance
and retirement contributions. If a borrower has $25,000 of interest, rent and utility expenses and $70,000 of
payroll expenses, then only $23,333 of the interest, rent and utility expenses will be forgiven, because $23,333
is 25% of $70,000. We can now be sure that the 75% of payroll requirement does not mean that there is no
forgiveness if payroll costs are less than 75% of the total loan amount.
7. The Further Reduction Tests. The total amounts that would otherwise be forgiven for the above payroll
costs and costs for rent, interest and utilities will be further reduced if there are reductions in the number of
employees considered to be employed during the eight week period, and by certain reductions of
compensation as to one or more particular employees, as described below.
8. The Timing of Payroll. The Interim Final Rules go into significant detail with respect to the timing of
payroll costs, and how the new Alternative Payroll Covered Period that was introduced in the Loan
Forgiveness Application and Instructions will work. These new rules allow borrowers to use their normal
payroll period of one week or two weeks, as explained in the following example:
Example: A borrower has a bi-weekly payroll schedule (every other week). The borrower’s eight-week covered
period begins on June 1 and ends on July 26. The first day of the borrower’s first payroll cycle that starts in the
covered period is June 7. The borrower may elect an alternative payroll covered period for payroll cost purposes
that starts on June 7 and ends 55 days later (for a total of 56 days) on August 1. Payroll costs paid during this
alternative payroll covered period are eligible for forgiveness. In addition, payroll costs incurred during this
alternative payroll covered period are eligible for forgiveness as long as they are paid on or before the first regular
payroll date occurring after August 1. Payroll costs that were both paid and incurred during the covered period (or
alternative payroll covered period) may only be counted once.
25Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
As the result of this, borrowers electing the Alternative Payroll Covered Period will not have forgiveness for
payroll costs that are incurred between the day after receiving the PPP loan and the day that the next payroll
period starts. It may be possible to delay paying employees, so that the amounts that are paid during the 56-
day Alternative Payroll Covered Period will include amounts due for days worked before that period begins,
and to also have forgiveness on amounts paid during and after the applicable 56 days for services rendered
during Alternative Payroll Covered Period.
9. Bonuses and Hazard Pay. The Interim Final Rules also make it clear that compensation paid to a
furloughed employee, and also bonuses and “hazard pay” will be included as legitimate payroll costs, except
to the extent that such amounts would push an employee’s total compensation above $15,385 ($100,000 times
8/52nds) during the measurement period.
10. New Harm Imposed Upon Employed Corporate Shareholders. The Interim Final Rules add a new and
surprising limitation for compensation paid to “owner employees and self-employed individuals.” The Rules
state that compensation paid to owners cannot exceed the lesser of (1) 15,385, or (2) 8/52nds of their 2019
compensation. The Rules point out that this limitation applies to all businesses, so shareholders of S-
Corporations or C-Corporations that paid low compensation amounts in 2019 may have limited forgiveness as
a result of this. This will also severely punish new businesses where owners may not have taken a full year of
compensation or had limited earnings in 2019. Hopefully, future guidance will clarify that businesses that
were not in operation for all of 2019 will be able to use some alternative calculation to apply this limitation.
11. Some Relief for General Partners. While General Partners in a partnership are generally limited to the
lesser of (1) $15,385 of forgiveness for compensation paid to them by the partnership, or (2) 8/52ds of their
2019 “net earnings from self-employment” (limited to $100,000 as prorated for the eight week period), their
net earnings from self-employment will not be reduced by Section 179 expense deductions, un-reimbursed
partnership expenses, or depletion from oil and gas properties, multiplied by 92.35%.
26Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
Therefore, partners that had low taxable income as a result of a significant Section 179 deduction or
depletion deduction, income will not be unfairly penalized as a result of this. Many readers of the Interim
Final Rules will wonder where the 92.35% comes from. This percentage is from Form 1040 Schedule SE,
which assesses Self-Employment Taxes on partnership income. Self-employment income is reduced to
92.35% of net partnership income or net Schedule C income to take into account the “employer’s” share of
payroll taxes (7.65% consisting of 6.2% social security and 1.45% Medicare). By multiplying partnership
income by this percentage, payroll costs for partner’s self-employment income more closely resembles
gross wages received by employees, which are not increased by the employer’s share of payroll taxes.
12. Self-Employed Individuals Still Out of Luck. The Interim Final Rules emphasize that there is no
forgiveness provided for retirement or health insurance contributions made for self-employed individuals
(independent contractors or sole proprietors) or General Partners, using the reasoning that “such expenses
are paid out of their net self-employment income.” Net self-employment income is
determined after reduction for contributions made towards employee retirement and health insurance
expenses on the Form Schedule C and Form 1065, and such filers are not allowed to take deductions for
contributions to their own retirement plan or health expenses, which is apparently the reasoning that the
SBA is following for not allowing self-employed individuals or partners in a partnership to take health
insurance and retirement plan costs into account.
13. What If You Tried to Bring Them Back, Jack? The question as to whether an employee who was
laid off can be considered to have been brought back for purposes of the reduction to indebtedness that
incurs when there is a reduction in the number of employees has been clarified and made more liberal by
the following language:
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!27
Step One: Measure expenses that apply to reduce the indebtedness during the eight weeks following the first disbursement of the loan.
Step Two: Reduce the above amount if any employee’s compensation during the eight week period is reduced by more than 25% as compared to the most recent full quarter that the employee was employed.
Step Three: Reduce the above amount if you have a reduction in the total number of employees during the covered period as compared to the elected prior period.
Step Four: Divide total Payroll Costs by .75 to determine whether at least 75% of the potential forgiveness amount was used for payroll costs.
The lesser of (1) Steps 1-3 Amount or (2) Step 4 Amount = Loan Forgiveness
Reduction of Forgiveness If Reduced Employee Hours or Compensation Beyond Permissible Thresholds
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!28
Paycheck Protection Program Loans –Loan Forgiveness – Reduction of the Total Number of
Employees
Average monthly FTE Employees in 8 week period beginning on date of loan origination
Average monthly FTE Employees from (1) Feb 15, 2019 – June 30, 2019 or (2) Jan 1, 2020 - Feb 29, 2020.
• If a business receiving a loan reduces the number of employees employed during the eight week covered period then the amount eligible for forgiveness is also reduced.
FTE = Full-Time Equivalent Employees calculated based on ratio of total paid hours during a period over number of working hours in period.
For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0.
A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!29
Paycheck Protection Program Loans –Loan Forgiveness – Reduction of the Total Number of
Employees
Example - $100,000 Loan Amount with $70,000 spent on payroll costs and $30,000 spent on non-payroll costs.
FTE Employees during eight week period = 15
FTE Employees during elected prior period = 20
Loan is further reduced by 25%.
(15/20) x $100,000 = $70,000 of loan forgiveness.
Application of 75% Rule - $70,000 / 0.75 = $93,333
Loan Forgiveness is equal to $70,000 which is the lesser of (1) $70,000 or (2) $93,333.
30Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
Specifically, in calculating the loan forgiveness amount, a borrower may exclude any reduction in full-time
equivalent employee headcount that is attributable to an individual employee if:
(i) the borrower made a good faith, written offer to rehire such employee (or, if applicable, restore
the reduced hours of such employee) during the covered period or the alternative payroll covered
period;
(ii) the offer was for the same salary or wages and same number of hours as earned by such
employee in the last pay period prior to the separation or reduction in hours;
(iii) the offer was rejected by such employee;
(iv) the borrower has maintained records documenting the offer and its rejection; and
(v) the borrower informed the applicable state unemployment insurance office of such employee’s
rejected offer of reemployment within 30 days of the employee’s rejection of the offer.
A Footnote [4] on page 14 indicates that further guidance on how borrowers will report rejected rehire
offers to state unemployment insurance offices will be provided on the SBA’s website, and the new Rules
have added that employers will be required to “nark” on employees who do not come back to work and
may be receiving the $600 a week federal unemployment compensation as part of the application process.
31Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
Specifically, in calculating the loan forgiveness amount, a borrower may exclude any reduction in full-time
equivalent employee headcount that is attributable to an individual employee if:
(i) the borrower made a good faith, written offer to rehire such employee (or, if applicable, restore the reduced
hours of such employee) during the covered period or the alternative payroll covered period;
(ii) the offer was for the same salary or wages and same number of hours as earned by such employee in the last
pay period prior to the separation or reduction in hours;
(iii) the offer was rejected by such employee;
(iv) the borrower has maintained records documenting the offer and its rejection; and
(v) the borrower informed the applicable state unemployment insurance office of such employee’s rejected
offer of reemployment within 30 days of the employee’s rejection of the offer.
A Footnote [4] on page 14 indicates that further guidance on how borrowers will report rejected rehire
offers to state unemployment insurance offices will be provided on the SBA’s website, and the new Rules
have added that employers will be required to “nark” on employees who do not come back to work and
may be receiving the $600 a week federal unemployment compensation as part of the application process.
14. Headcount Reduction Relief. At page 22 of the Interim Final Rules, an employee who is “fired for
cause, voluntarily resigns, or voluntarily requests a schedule reduction” will not be counted as no longer
being in the business for the “fewer employees” reduction test.
32Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
The Rules also add that “borrowers should not be penalized for changes in employee headcount that
are the result of employee actions and requests.” Many borrowers were wondering if they would be
penalized for a headcount reduction in situations where employees have died or are incapacitated as a
result of the virus or other circumstances. Do they have to make an offer to rehire such employee and
document that it cannot be accepted with a death certificate? It may be possible that the above emphasized
language can be used to show that the reduction due to death was not due to an employer action and that
no reduction in loan forgiveness should occur.
15. Full-Time, Part-Time, All Around the Town. The Interim Final Rules also define “full-time
equivalent employee” to mean an employee who works 40 hours or more, on average, each week. Hours in
excess of 40 are disregarded for purposes of determining whether there has been a reduction in the number
of employees.
The Interim Final Rules give more guidance on the election that borrowers can make to consider all part-
time employees to be working exactly 20 hours a week for calculation purposes.
The Interim Final Rules also confirm that employees who were hired in 2020 will be included in the
reduction calculation . . . 25% test.
16. Reducing Hours vs. Reducing Rate of Pay. The Interim Final Rules also confirm that a reduction in
compensation that is attributable to a reduction in the number of employee’s hours will not be counted as a
reduction in compensation for the 75% or more test so that borrowers will not be double penalized for both
a headcount and wage reduction.
33Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
In other words, if an employee making $10 an hour and working 40 hours a week would normally
therefore earn $400 a week, and this employee is reduced to 20 hours a week, the fact that she will only
make $200 a week does not cause this to be considered a more than a 25% reduction in her compensation.
This would work the same way if she was reduced from $10 an hour and 40 hours a week to $7.50 an hour
and 20 hours a week, because it would still not be a “more than 25% reduction in pay,” as relative to hours
worked. The borrower would still have a reduction in loan forgiveness because the employee headcount
would be reduced by at least 0.5, although this reduction could be compensated for by hiring another part-
time employee.
This applies notwithstanding whether there is an overall reduction in employee hours that causes a
reduction in forgiveness as a result thereof.
The rules do not address whether an owner-employee or partner in a partnership is considered in the
headcount calculations.
Hats off to Kevin Cameron, CPA for coming up with a spreadsheet calculator that has enabled us to run
scenarios to see how the loan numbers really work, and to assist borrowers in determining what the relative
costs and benefits are of bringing workers on or expanding otherwise applicable work hours, and adjusting
compensation, with due regard to what extent loans will be forgiven or repaid. A PDF of Kevin’s
spreadsheet, which is available for purchase in Excel from Leimberg Information Services can be obtained
by emailing me and putting “Send Spreadsheet” in the Subject/RE line. The AICPA has a free spreadsheet
available on their website that is somewhat harder to use, and Bob Keebler has a simpler one as well.
It helps to have the spreadsheet in hand when reviewing the below to know how everything fits together.
34Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
35Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
C&L Value Advisors, LLC
Kevin A. Cameron, CPA [email protected]
Phone 813-286-7373
Paycheck Protection Loan Forgiveness Expense Tracker
Enter data in the light blue cells only
Enter Company name: Sample Company
Covered Period:
What date did your loan fund (money was released to you)? 4/17/2020 This is the start of your 8 week period
This is the end date you use for measuring loan forgiveness: 6/11/2020 This is the end of your 8 week period
For borrowers with bi-weekly or more frequent payroll (using
this Alternate Payroll Covered Period is optional):
Alternate Payroll Covered Period:
Enter first date of the first pay period AFTER the loan funding date 4/22/2020 This is the start of your Alternate Payroll 8 week period
The is the end date you use for Payroll expenses only 6/16/2020 This is the end of your Alternate Payroll 8 week period
Enter the above dates/time periods on your Loan Forgiveness Application
Enter the amount of loan received 120,000.00$
(Click on cell for instructions)
DESCRIPTION
DATE
EXPENSE
INCURRED
DATE
EXPENSE
PAID OR
PAY
PERIOD
DATE TOTAL
GROSS
PAYROLL
HEALTH
INSURANCE
STATE
PAYROLL
TAXES
RETIREMENT
PLAN
CONTRIBUTIO
NS
INTEREST
ON
MORTGAGE
S IN PLACE
BEFORE
02/15/2020
RENT OR
LEASE
PAYMENTS UTILITIES
SUPPORTING
DOCUMENTS
ATTACHED
Yes or No
See Payroll Summary 5/6/2020 5/8/2020 21,000.00 21,000.00 Yes
Aetna health insurance - May's premium, prorated 5/1/2020 5/8/2020 3,000.00 3,000.00 Yes
Florida Unemployment Taxes - See Payroll Summary 5/6/2020 5/8/2020 300.00 300.00 Yes
401k Employer matching contribution on payroll 5/6/2020 5/25/2020 720.00 720.00 Yes
Mortgage loan payment 5/5/2020 5/10/2020 5,000.00 5,000.00 Yes
Rent payment 5/1/2020 5/8/2020 7,500.00 7,500.00 Yes
Copier lease payment 5/1/2020 5/8/2020 250.00 250.00 Yes
Electricity 5/10/2020 5/15/2020 750.00 750.00 Yes
Gas 5/10/2020 5/15/2020 250.00 250.00 Yes
36Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Owners Compensation
Employee's Name
Employee
Identifier (last
4 digits of
their SSN)
Cash
Compensation
(Gross Wages)
Paid - do NOT
enter more than
$15,385
Enter Cash
Compensation for
2019
Cash
Compensation
allowed for
PPP Loan
Forgiveness
Bob Sample 1240 15,385.00 96,000.00 14,769.00
Mary Sample 1241 15,385.00 120,000.00 15,385.00
-
-
-
-
-
-
-
-
-
-
Totals 30,770.00 30,154.00
PPP Schedule A Line Reference Line 9
37Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
PPP Schedule A
Enter data in the light blue cells only
Company name: Sample Company
OK - Your Payroll Equals Total From Expense Tracker
PPP Schedule A Worksheet, Table 1 Totals
Line 1 - Total Cash Compensation (Box 1 of Worksheet) 16,580.00
Line 2 - Enter Average FTE (Box 2 of Worksheet) 4.20
Line 3 - Enter Salary/Hourly Wage Reductions (Box 3 of Worksheet) 2,400.00
PPP Schedule A Worksheet, Table 2 Totals
Line 4 - Total Cash Compensation (Box 4 of Worksheet) 29,385.00
Line 5 - Enter Average FTE (Box 5 of Worksheet) 2.90
Non-Cash Compensation Payroll Costs during period:
Line 6 - Total amount paid for Health Insurance 6,600.00
Line 7 - Total amount paid for Retirement Plan contributions 3,200.00
Line 8 - Total amount paid for employer state and local taxes 1,280.00
Line 9 - Compensation to Owners (from Schedule A Worksheets) 30,154.00
Line 10 - Total Payroll Costs 87,199.00
38Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
17. The Banker’s Dozen (of Headaches). The second set of Interim Final Rules issued Friday night, which is
cleverly known as SBA-2020-0033 outlines the “Loan Forgiveness Process” on page 7, and provide that a
borrower must complete and submit the Loan Forgiveness Application (SBA Form 3508 or Lender
Equivalent) to the lender servicing the loan.
The lender has 60 days after receipt of the complete Application to review the Application and supporting
documentation and “issue a decision to SBA” as to how much is to be forgiven, at which time it will also
request payment from the SBA of such forgiven amounts.
The SBA is to then remit the applicable amount to the lender, plus any interest accrued thereon, not later than
90 days after the lender has issued its decision.
The SBA will deduct up to $10,000 of EIDL advance amounts that have been given to the borrower from the
amount remitted to the lender.
18. Ineligible Borrowers Cause Bankers to Lose Their 5% Loan Fees. If the SBA determines that the
borrower was not eligible to receive a PPP loan based upon applicable rules, then the loan will not be eligible
for any forgiveness whatsoever, and the lender will be responsible for notifying the borrower.
Any balance due on a PPP loan must be repaid by the borrower on or before the two year anniversary of when
the loan was made.
If the borrower has made payments on the loan before they are due, then the lender must remit the amount that
the borrower paid to the borrower, plus accrued interest if the amount that the SBA pays to the lender exceeds
the remaining principal balance of the note.
39Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
19. SBA Review. The Interim Final Rule indicates that the SBA may review any PPP loan, and whether a
borrower calculated the loan amount correctly and used loan proceeds for allowable uses in making its
determination as to how much of the loan is to be forgiven, but the SBA is not required to do this and may
rely upon the borrower and the lender to do this.
20. 6-Year Record Retention. Borrowers must retain the PPP documentation in their files for at least six
years after the date that the loan is forgiven or repaid in full. If the SBA determines that a borrower was not
eligible for a loan, then none of the loan can be considered as having been forgiven.
21. Banker Requirements. Lenders are required to do the following:
(i) Confirm receipt of borrower’s certifications contained in the Loan Forgiveness Application Form.
(ii) Confirm receipt of the documentation that must be submitted to verify payroll and nonpayroll costs.
(iii) Confirm that the borrower’s calculations on the Application are accurate.
(iv) Confirm that the 75% of payroll test is being complied with.
The lender is not required to independently verify the borrower’s reported information, if the borrower attests to the fact that it has provided the appropriate documentation supporting its request.
Lenders will have to give back their loan processing fees within one year after a loan was disbursed, if the
SBA determines that the borrower was not eligible to receive the loan, notwithstanding whether this was the
fault of the bank or not.
40Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Forbes Post May 23, 2020 | May 22 PPP Final Interim Rules Provide Further Guidance and Some Surprises, Cont’d
Nevertheless, the SBA will still guarantee the loan, if the lender has complied with its obligations, so
the lender’s risk is limited to the loss of its fee and possible causes of action by borrowers against
lenders who may allegedly give incorrect advice on the process.
CONCLUSION
We can be sure there will be further changes and clarifications by FAQ’s and regulations as time
marches on, but we appear to be well past the 50-yard line in understanding what is needed and
required to comply with this program, and what planning and actions can occur to help assure that the
intended effect of this program can be effectuated, at least to some degree, for all borrowers.
In the meantime, please be very kind to CPA’s, who have both tax filing and now PPP loan deadlines
to attend to as best they can.
5.24.2020 - Copyright © 2020 Gassman, Crotty & Denicolo, P.A
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!41
SMALL BUSINESS ADMINISTRATION13 CFR Part 120
(Docket Number SBA-2020-0032)RIN 3245-AH46
DEPARTMENT OF THE TREASURYRIN 1505-AC69
Business Loan Program Temporary Changes; Paycheck Protection Program – Requirements
– Loan Forgiveness
Issued Friday, May 22, 2020
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PPP Loan Update: Friday, May 22nd SBA Regulation Discussion – They’ve Done It Again!68
SMALL BUSINESS ADMINISTRATION13 CFR Part 120
(Docket Number SBA-2020-0033)RIN 3245-AH47
Business Loan Program Temporary Changes; Paycheck Protection Program – SBA Loan
Review Procedures and Related Borrower and Lender Responsibilities
Issued Friday, May 22, 2020
69Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Interim Final Rule, SBA 2020-0033
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A Leimberg Information Services Webinar Presentation
MAXIMIZING PPP LOAN FORGIVENESS AFTER THE NEW SBA INTERIM FINAL RULES ISSUED MAY 22ND
TIPS, TRICKS AND STRATEGIES FOR CPAS, LAW FIRMS AND OTHER ADVISORS TO SURVIVE AND THRIVE
DURING THIS CRISISINCLUDES 30 MINUTES OF QUESTIONS AND ANSWERS
Tuesday, May 26, 202011:30 AM to 1 PM EDT
(90 minutes)Presented by:
Brandon Ketron
Alan Gassman
Featuring the amazing:
Kevin Cameron, MBA, CPA
Kevin Cameron
88
Copyright © 2020 Gassman, Crotty & Denicolo, P.A.
05.24.2020 PPP Loan Update: Friday, May 22nd SBA Regulation Discussion
They’ve Done It Again!
Thursday, May 28,
2020
Alan Gassman presents:
What Clients Need To Know About Bankruptcy
from 12:30 PM to 1 PM ET
Saturday, May 30,
2020
Alan Gassman presents:
Creditor Protection For Physicians
from 9 AM to 9:30 AM ET
Thursday, June 4,
2020
Brandon Ketron presents:
Section 199A And Related Income Tax Planning
from 12:30 PM to 1 PM ET
Saturday, June 6,
2020
Alan Gassman presents:
Planning For The Single Physician
from 9 AM to 9:30 AM ET
Thursday, June 11,
2020
Christopher Denicolo presents:
Planning for S Corporations
The Basics, Tricks and Traps
from 12:30 PM to 1 PM ET
UPCOMING FREE WEBINARS FROM OUR FIRM
89
Copyright © 2020 Gassman, Crotty & Denicolo, P.A.
05.24.2020 PPP Loan Update: Friday, May 22nd SBA Regulation Discussion
They’ve Done It Again!
UPCOMING FREE WEBINARS FROM OUR FIRM
Thursday, June 18,
2020
Christopher Denicolo presents:
Understanding Charitable Remainder Trusts
Add New Tools to Your Belt
from 12:30 PM to 1 PM ET
Thursday, June 25,
2020
Ken Crotty presents:
SCRAT
from 12:30 PM to 1 PM ET
Thursday, July 2, 2020
Ken Crotty presents:
Gift Tax Return Tips and Traps
from 12:30 PM to 1 PM ET
Thursday, July 9, 2020
Ken Crotty presents:
LLC Drafting Tune Ups and Checklist
from 12:30 PM to 1 PM ET
Thursday, July 16,
2020
Ken Crotty presents:
Inheritance Trust Implementation and Planning
From 12:30 PM to 1 PM ET
Thursday, July 23,
2020
Ken Crotty presents:
Estate Tax Return Tips and Traps
from 12:30 PM to 1 PM ET
90
For more information, email:[email protected] 91
92Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Time Topic Speaker Topic Speaker
8:00-8:10 Greeting Dean and Director
8:10-9:20Current Developments of importance to estate
planners.Howard Zaritsky None
9:20-10:20 Current Developments (continued) Howard Zaritsky None
10:20-10:35
Break Break
10:35-11:35
To Gift Or Not To Gift: Balancing Income and Transfer Tax Benefits For Couples Worth
Between $12 Million to $22 Million Jeff Chadwick
Rescue Planning For Existing CLATs Where Lower Asset Values Will Deplete Principal Reducing Or
Eliminating Estate Plan Benefits
Notre Dame Advisory Board
11:35-12:35
Avoiding The Estate Planning “Blue Screen Of Death” With Competent And Ethical Practices
(Ethics)Gerry Beyer
Defensive Practices Because Nothing Is Safe: How Practitioners
Can Be Safer And Reduce Malpractice Risks (Ethics)
Sandy Glazier Howard Zaritsky
Marty Shenkman
12:35-1:50 Luncheon
1:50-2:50Turning Off Grantor Trust Status: Mechanics, Tax Implications, Effect On Entities, Abusive
Transactions, And State Law ObstaclesDavid Kirk
Estate Planning To Obtain The Best Economic Outcome For Beneficiaries of IRA And
Retirement Assets
Steve Trytten
2:50-3:50 Michael GordonCreative Planning With Charitable
Remainder Trusts: You Will Flip When You See This
Michael MulliganJohn Grzybek
3:50-4:05 break break
4:05-5:35
Perspectives On Planning For Personal Property: Collectibles, Philanthropy, Auction
Houses, Income Taxes, And The Next Generation
Kim KaminAdd OthersShenkman, Moderator
None
Agenda
Thursday, October 29, 2020(Wednesday)
3:30 pm to 5:30 pm
A Comprehensive Review of the SECURE Act And How To Draft For What Is Still Not Clear.
Christopher Denicolo
93Copyright © 2020 Gassman, Crotty & Denicolo, P.A. 5.24.2020 (Gassman / Ketron / Cameron) PPP Loan Update: Friday May 22nd SBA Regulation Discussion
Time Topic Speaker Topic SpeakerTrack A Track B
8:00-9:00CARES Act Loan Forgiveness, Tax Issues and
Related Aftermath of COVID-19David Herzig
Alan GassmanAn Estate Planning Roadmap for 2020 and
2021Marty Shenkman
9:00-10:00Bob Keebler
Foreign v. Domestic: Which Jurisdiction Is Right For Your Client Considering Asset
ProtectionGideon Rothchild
10:00-10:15 Break
10:15-11:15Life Insurance Best Interest Pressures And Evaluation Other Factors Advisors Need To
Consider
Rebecca RyanBarry Flagg
Todd Steinberg, Moderator
The Land of Oz: A Hard And Candid Look At Opportunity Zone Tax Incentives: Would You Make The Investment If There Were No Tax
Incentives?
Jay Darby
11:15-12:15Todd Petit
Todd Steinberg, Moderator
I Have A Lot of Investment Expenses: What Is And What Is Not Deductible
Louis Harrison
12:15-1:15 Luncheon Luncheon
1:15-2:15Navigating Common Trustee Liability Exposures
And Defensive Steps To Take In Advance
Stacy SingerTom Abendreth
The Income Tax Impact Of The New Transfer For Value Regulations: What Is No Longer A
Safe Harbor For Transfers Of A Life Insurance Policy
Stuart KohnAdam Garber
2:15-3:15Securing Client Data And Teleworking: Ethical
Concerns and Practical Tips (Ethics)Karin Prangley
The Mine Fields Of The Lawyer As A Fiduciary: Do You Know How To Navigate
Them? (Ethics)Paul Hood
3:15-3:30 Break Break
3:30-4:30Variations On A Theme: The Uniform Trust
Code In The Midwest And States Considering Its Adoption
Susan BartBDITs and BDOTs: The Basics, Concerns To
Evaluate And Best PracticesAnita Sarafa
4:30-5:30Basis Planning And Income Tax Deferral While A
Client Is Living Or For Appreciated Assets Owned By Trusts Not Exposed To Estate Tax
George Karibjanian
Defined Value and Price Adjustment Clauses: Background, How to Mitigate the Need to Use Them, and How to Handle an
IRS Audit
Chris Siegle
Agenda
Friday, October 30, 2020* Ethics credits are tentative, depending on the accrediting bodies for each state.
Presented by:
Brandon Ketron
Alan Gassman
Featuring the amazing:
Kevin Cameron, MBA, CPA
Kevin Cameron
PPP Loan Update: Friday, May 22nd SBA Regulation Discussion
They’ve Done It Again!
Sunday, May 24, 2020
11 AM to 11:30 AM ET
(30 minutes)