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Dustin and his legal team at Kaufman and Canoles have been feverishly studying the CARES Act daily to best advise their clients in the lending industry. Read his advice on how to navigate the loan process and what to keep in mind as you do. When you’re done, come back to this space to post any questions you’d like answered. Dustin will be on hand Friday, April 10 at 1 PM to provide answers, so check back then or anytime after to hear his thoughts.
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Andy Bates
Good afternoon! Can you speak a little to how the Families First Coronavirus Response Act (FFCRA) impacts what one can use the PPP for in terms of payroll expenses? I know the FFCRA provides for qualified sick and family leave wage credits, but I'm just not clear on how to avoid "double dipping." Thanks in advance for taking the time!
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Dustin DeVore 
Good afternoon! Can you speak a little to how the Families First Coronavirus Response Act (FFCRA) impacts what one can use the PPP for in terms of payroll expenses? I know the FFCRA provides for qualified sick and family leave wage credits, but I'm just not clear on how to avoid "double dipping." Thanks in advance for taking the time!

Generally, payroll, mortgage interest, rent and utilities. I suggest you be very careful in using it for anything else and discuss with your attorney or CPA prior to using the funds with anything else. 
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Douglas L. Smith Doug Smith
Dustin - great to have you in our forum. Businesses are hungry for information and and expert advice
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Dustin DeVore 
Good afternoon! Can you speak a little to how the Families First Coronavirus Response Act (FFCRA) impacts what one can use the PPP for in terms of payroll expenses? I know the FFCRA provides for qualified sick and family leave wage credits, but I'm just not clear on how to avoid "double dipping." Thanks in advance for taking the time!

Generally, payroll, mortgage interest, rent and utilities. I suggest you be very careful in using it for anything else and discuss with your attorney or CPA prior to using the funds with anything else. 


Please also note you must use at least 75% for payroll within 8 weeks of receiving the funds
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Douglas L. Smith Doug Smith
Dustin -
Can you talk about the size requirements in a bit more detail and what, if any, exemptions there are to the “500-employee rule”?

 

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Dustin DeVore 
Dustin -
Can you talk about the size requirements in a bit more detail and what, if any, exemptions there are to the “500-employee rule”?

 


Great question Doug. Yes- some of the exceptions to the 500 employee rule are hospitality and certain franchises that have been approved. 
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Douglas L. Smith Doug Smith
Another question for you: If the nature of my business and workflow means I’ve had to let employees go and have no idea when I’ll be able to rehire, does it make more sense to apply for EIDL over PPP assistance?
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Dustin DeVore 
Another question for you: If the nature of my business and workflow means I’ve had to let employees go and have no idea when I’ll be able to rehire, does it make more sense to apply for EIDL over PPP assistance?


It may, however, so far our clients have not had much luck in getting approved. The process for EIDL seems to be taking very long so PPP may be the better way to go. Remember, even if all of the loan is not forgiven that is ok- it becomes a 2 year loan at 1% with a 6 month deferral. 
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JR Hipple
We've heard that some smaller banks have had success obtaining loan approval for their clients, but larger institutions have struggled. Are you seeing any differences between the two?
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Douglas L. Smith Doug Smith
Dustin: I have heard discussions that some small businesses are concerned they are not getting there applications in quickly and the money will run out. There was an article in the Pilot this morning about Congress perhaps adding an additional $200-250B to to the  Paycheck Protection Program. Do you have any comments about that possibility?
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Dustin DeVore 
Dustin: I have heard discussions that some small businesses are concerned they are not getting there applications in quickly and the money will run out. There was an article in the Pilot this morning about Congress perhaps adding an additional $200-250B to to the  Paycheck Protection Program. Do you have any comments about that possibility?


Yes- the original program is for $349 billion. Senate Republicans have asked for an additional $251 Billion.  According to Sen Rubio (who was the primary author of PPP)  as of 2:30 yesterday $124 Billion had been used. 
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Alisa Crider acrider

Hi Dustin,

I just heard two great questions from a local business. Would you mind addressing both of these, please?

1. What loan programs do you recommend for the self-employed?
2. Do you know if subcontractors that get paid on 1099 (payroll) can be included in the application (PPP)?

Thanks for your time and expertise!
Alisa

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Dustin DeVore 
JR Hipple wrote:
We've heard that some smaller banks have had success obtaining loan approval for their clients, but larger institutions have struggled. Are you seeing any differences between the two?


Yes- the smaller banks have been more nimble. Initially several of the larger banks seemed to be dragging their feet. 
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Dustin DeVore 

Hi Dustin,

I just heard two great questions from a local business. Would you mind addressing both of these, please?

1. What loan programs do you recommend for the self-employed?
2. Do you know if subcontractors that get paid on 1099 (payroll) can be included in the application (PPP)?

Thanks for your time and expertise!
Alisa



Yes! You can apply as can Independent contractors today. I suggest you contact Natasha Merz at OPNB nmerz@oldpoint.com
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Douglas L. Smith Doug Smith
Dustin:  I understand that today Independent contractors can apply for the Payment Protection Program - meaning those companies that file 1099's. Is that correct? Are you fielding inquiries from many independent contractors anxious to participate in this program? Do you have any specific advice for them?
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Dustin DeVore 
Dustin:  I understand that today Independent contractors can apply for the Payment Protection Program - meaning those companies that file 1099's. Is that correct? Are you fielding inquiries from many independent contractors anxious to participate in this program? Do you have any specific advice for them?


Yes - that is correct Doug. Today (April 10th) is the first day that IC's (1099's) can apply. 
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Steve Harrison Steve


Yes - that is correct Doug. Today (April 10th) is the first day that IC's (1099's) can apply. 

Is there a closing date for when businesses and ICs can apply or is it simply when the funds run out?
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Dustin DeVore 
Steve wrote:

Is there a closing date for when businesses and ICs can apply or is it simply when the funds run out?


We do not know yet if the additional funds will be approved or when the funds will run out. However, at the rate it is going it will be soon so I suggest you apply immediately - the application process is not that difficult (especially compared to a typical commercial loan)
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Douglas L. Smith Doug Smith
Dustin: while everyone is focused on getting access to funds right now, can you explain how some or all of the loan will be forgiven. Who makes that decision? The SBA? the Bank? and how soon can that happen
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Steve Harrison Steve
Dustin: while everyone is focused on getting access to funds right now, can you explain how some or all of the loan will be forgiven. Who makes that decision? The SBA? the Bank? and how soon can that happen
I had the same question; sounds like slight confusion about loan forgiveness is making some people hesitant to apply.  Documentation is key, though, correct?
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Dustin DeVore 
Dustin: while everyone is focused on getting access to funds right now, can you explain how some or all of the loan will be forgiven. Who makes that decision? The SBA? the Bank? and how soon can that happen


The guidance on this is being updated and revised nearly every day. However, it appears that if you use 75% or more of the funds for payroll and the remainder for rent, mortgage interest and utilities and that you maintain your workforce (based on an FTE calculation) that it will be forgiven - it is not clear yet exactly how the process for forgiveness will work
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Douglas L. Smith Doug Smith
Dustin: while everyone is focused on the current programs, we do expect Congress to make some changes and perhaps have another relief package. Is there anything they missed this time that you would like to see corrected
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Dustin DeVore 
I think there will be some refinements. I think it would be a great idea if they included an absolute hold harmless for lenders except in the case of fraud. Many lenders have been apprehensive about the program because they are concerned they will make a loan and later the SBA will pull the guarantee because of a technicality. 
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Andy Bates
What if a business is holding on pretty well right now, but there's a chance this money might really be needed two months from now if current projections hold true. Does it make sense to apply now even though one business' situation isn't as dire as others?
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Dustin DeVore 
You are required to make a certification on the application that the loan is "necessary...." If you can honestly respond tot hat question as most businesses probably can) then you can apply. 
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Douglas L. Smith Doug Smith
Dustin: I really appreciate you taking some time to answer questions following up on the Blog you posted earlier. Is there anything you would like to share before we close out this discussion.
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Dustin DeVore 
Dustin: I really appreciate you taking some time to answer questions following up on the Blog you posted earlier. Is there anything you would like to share before we close out this discussion.


Thanks for having me! If anyone wants more info please go to Kaufcan.com- hope everyone has a great Passover and Easter-DD
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Erik J. Olson 
Great thread. Thanks for all the info!

~
Erik J. Olson
Array Digital
thisisarray.com
757.333.3021
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