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Dustin and Jonathan of Kaufman and Canoles have been on top of the Payroll Protection Program since its inception. Learn what you need to know about the SBA’s recently released PPP Loan Forgiveness Application and come back here to post any questions you’d like answered.

Dustin will be on hand Friday, May 22 at 1 PM to provide answers, so check back then or any time after to hear his thoughts.

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Steve Harrison Steve
Dustin, thank you so much for being our first returning expert, and welcome to the forum Jonathan!  We are thrilled to have you here to talk about the evolution of PPP and the forgiveness process.
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Dustin DeVore 
Glad to be back! Lots of changes to PPP and more coming.
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jlazarow
We are thrilled to be here and answer your questions.
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Steve Harrison Steve
From your considerable experience working with businesses regarding CARES Act funding like the PPP, what’s the climate like out there and how has it evolved since your initial appearance on the forum in April? How helpful has this funding been for small businesses?
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Dustin DeVore 
Overall the PPP program has been very helpful for small businesses and a true lifeline. As it was rolled out with unprecedented speed it has certainly had bumps along the way but has frankly kept many of our clients in business and out of BK. 
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Steve Harrison Steve
I noticed on the application form that those employers who received more than $2 million in funding are going to be audited. Do you know why that’s the case and what the auditing process will entail?  
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jlazarow
I agree with Dustin, it has been extremely helpful for many small businesses. I think various industries are experiencing this situation differently.
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Dustin DeVore 
We do not know what the current SOP will be for audits but it may take some time as there are a massive number of loans for the government to review. The $2 million figure was picked in order to assist truly small businesses with the ability to not have to worry about the certification on the application that required the business to certify the funds were needed due to the COVID crisis and this certification was causing much confusion.
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Steve Harrison Steve
With the PPP, it seems the primary focus has usually been on businesses, but independent contractors are also eligible. Is there anything in the SBA’s recent guidelines that pertains to independent contractors? What do they need to know and show to obtain loan forgiveness? 
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Cathy Lewis Cathy Lewis
What is the impact of layoffs on PPP loan forgiveness?
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jlazarow
Independent contractors are eligible for PPP loans. ICs can obtain their prorated income up to 100,000. The SBA requires that ICs  provide tax documentation to support their income.
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Dustin DeVore 
Good question Cathy- a number of layoffs have occurred. What we don't know at this point is if they will be temporary or not. A big issue our clients are having is that because the Act included such generous (some would say overly generous) unemployment compensation many employees are reusing to come back to work. Tis is really an underreported story and having a huge negative impact on employers. 

The SBA has fixed this to some extent by allowing forgiveness for employees that refuse to come back. 
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Steve Harrison Steve
The list of mandatory documentation borrowers will need to provide for PPP loan forgiveness looks daunting at first blush. Do you have any tips for how borrowers can make sure they have all their ducks in a row documentation-wise?
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Steve Harrison Steve
I've also heard some changes are coming to the SBA PPP loan forgiveness application.  Do you know anything about this?
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jlazarow
Steve, that is a great question. Borrowers that have kept good records will be in great shape. The application will require that the borrower provides the following documentation:

  • Bank account statements or payroll provider records, payroll tax forms, and state employee wage reporting, as well as payment receipts, cancelled checks or account statements showing payments to employee health or retirement plans.
  • Documents showing the average number of full-time equivalent employees for either the period of February 15, 2019 through June 30, 2019, or January 1, 2020 through February 29, 2020.
  • Documents showing business mortgage interest payments, copies of lender amortization schedules or cancelled checks verifying payments.
  • Documents showing rent or lease payments, including copies of the current lease and receipts or cancelled checks verifying the eligible payments.
  • Documents showing all utility payments with invoices from February 2020 and from the 8 weeks following disbursement of the loans, including the utility bill one month after the 8-week period (to cover the full amounts of such utilities used during the 8-week period).
Moreover, employers should make sure that they have the following information, but they do not need to provide it with the application:
  • Each relevant employee’s date of hire/furlough/firing and the wages and any wage reductions, or reversal of such reductions, made to that employee.
  • Proof that no amounts paid to employees were in excess of the $100K annualized cap, or, if they were, that it was not paid with PPP Funds.
  • Any job offers, firings, furloughs, rehires, and evidence of any employee who refused to be rehired after a written offer was provided.
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Dustin DeVore 
Yes- Congress is working out some significant changes that will hopefully be approved in the next few days. These include potentially increasing the covered period when funds must be spent from 8 weeks to 16 weeks (or more) and reducing the requirement that a minimum of 75% of funds be spent on payroll be reduced. There may be other changes also has "horse trading" occurs in Congress. 
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jlazarow
Of course, with the possible changes to the PPP program, some of these requirements may change.
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Steve Harrison Steve
In terms of relief funding, the PPP has dominated the conversation. But for some businesses, the PPP wasn’t a great fit for their needs. What are some other resources out there with funding still available that businesses can explore?
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jlazarow
Steve, that is a great question. The SBA has offered the Economic Injury Disaster Loan (EIDL). This loan program allows borrowers to use funds to stabilize its business. Currently they are only accepting applications for agricultural businesses. However, if you had previously applied, the SBA will review your application. Larger businesses may be able to access the Main Street lending program. Cities and states are also offering support.
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jlazarow
In addition to the loan program, some businesses may be able to take advantage of the tax provisions.
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Steve Harrison Steve
The SBA released a forgiveness application a few days ago.  Can borrowers use that application?
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Dustin DeVore 
No- due to the upcoming changes referenced in the earlier question borrowers should wait for a revised application. 
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Steve Harrison Steve
Can the PPP funds be used for equipment rentals?
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jlazarow
Steve, that is a fantastic question. In the Act and in all the previous guidance PPP funds could not be used for personal property leases. However, the application does permit forgiveness for personal property leases. Assuming that the SBA application remains accurate, its possible that companies can obtain forgiveness for personal property leases, such as equipment rentals. We expect further guidance.
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Amy Jordan ajordan
What guidance is there for companies that received a PPP but have had a hard time calling back employees?
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jlazarow
Amy, that is a good question. The SBA will not reduce the loan forgiveness for employers that make a good faith effort to rehire employees. However, the employer should provide documentation that they made a good faith effort
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Amy Jordan ajordan
jlazarow wrote:
Amy, that is a good question. The SBA will not reduce the loan forgiveness for employers that make a good faith effort to rehire employees. However, the employer should provide documentation that they made a good faith effort


Thank you!  Should the employer report the employee to VEC as part of the documentation?
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jlazarow
I am not sure. I will have to consult with my labor and employment colleagues. Sorry.
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Amy Jordan ajordan
Dustin, we have had several communities have the same concerns as businesses about how to probably use the Cares Act funding they will each receive and how to document its use.  Have you been fielding any similar questions from EDAs or other public bodies?  
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andycallahan
Hi Dustin and Jonathan - what is the latest on the government extension on spending the PPP money?
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jlazarow
Amy, we will have to follow up with you on that. The PPP program is likely to change and therefore the ability to use funds for certain expenses may change as well. We will certainly communicate any changes.
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jlazarow
At the moment there has not been a change. It remains 8 weeks or 56 days starting when the loan was disbursed. However, proposed legislation may extend the period.
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Steve Harrison Steve
Thank you so much, Jonathan and Dustin, for being with us today!  Your answers have been incredibly helpful to 757 business owners and all of us who are trying to learn more about PPP as we go.   Would you mind sharing your contact information if anyone has follow-up questions or would like more information?
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jlazarow
Thank you very much for inviting us. I really enjoyed it. I am happy to share my contact information. Feel free to reach out to me with any questions. My email is jmlazarow@kaufcan.com and my phone number is 757-624-3117[image]
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Steve Harrison Steve
Thank you so much!  Have a great Memorial Day weekend!
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