Our bank is slow to respond and I think their main walk-in locations are closed. Can this be done strictly over the phone / online?

Any recommendations of Banks in Spring / The Woodlands or remote?

So what I learned is that my assumptions on calculations were correct. The calculations I posted before are accurate.

However, while applications are out, SOP for the banks and how they handle these have not been delivered to them yet. Banks have to do their due diligence and guarantee that they reviewed the material being submitted and the amount loaned is correct. If it's wrong, they are at risk for the entire loaned amount , not just the delta of incorrect to correct amount. Because of this, I don't think it will go as fast as the Feds intended.

On top of that, it was envisioned as a quick online portal, submit the application and go. Because of the risk mitigation on the banks part, they will have to review all of them individually. You'll still get the loan, but it won't be "instantaneous".

The other thing that changed this morning is that they revised some of the language on the term. Our banker said it's still a little unclear, but there is now a 2-year aspect. Whether that is a 2-year balloon or new fixed terms, he wasn't sure yet. He did say the initial term was fixed 10 years at 0.5%.

They are expecting to get the SOP tonight or in the morning do they can be prepared for Friday. It sounds like it will be first come, first serve and there are already a very large amount of companies prepping, so have your paperwork together and application filled.

We are pulling together all of our payroll calcs for 2019, separating our FT, PT and 1099 folks. We are pulling our sales funnel reports to show COVID impact through Q1, and we are prepping a documentation database to capture all costs applicable for forgiveness once given the loan. We'll open a separate account for the loan, and pull from it as needed. That way there is a clear paper trail for potential audit.

Looking at 2019 Payroll, how would you reconcile the following:

Employee making $50K that started in September of 2019 that is still employed
Employee made $90K through August of 2019 that was not employed after that

Our overall payroll numbers are somewhat similar to then but we've had people come on and drop off throughout the year...

Do we annualize the $90K to be 12 months. Do we take the $12.5K actually earned from the October employee and treat it as $50K (what it would be for an entire year?)

0.5% for two years.

Just my thoughts...I think many community banks won't participate in this. Not during these times of uncertain liquidity. You may see more volume with the big banks.

You want to calculate your actual monthly payroll for every month of the year, add them up and divide by 12 to get your average monthly payroll. Or get your annual total and divide by 12.

For your two examples:

Employee making $50k/year (gross I assume) would mean their monthly salary is $4,166.67, and you would have 4 months of that.

Employee that made $90k would not need to be annualized, because you didn't pay anything after that and their total is under the $100k threshold. They would account for $11,250 of your monthly payroll through 8 months.

Here is what I did (and we have plenty of folks that came or left during the year, were hourly vs. salaried, etc.)

For every month, I added all the payroll we paid out to employees, whether hourly or salaried. Took all of my monthly payroll and divided by 12 to get my average monthly. 2.5x of this number is my available loan amount.

Now, I started counting my FTEs during 2019, and i did this also on a monthly basis. If they were salaried, they were an FTE regardless of hours worked. If they were hourly, I added up all the hours paid out on payroll for hourly, and divided by 173 hours (2080 work hours in a year, 173 in a month) to get my hourly FTE. Add those together to get my individual monthly FTE count. Add every month up and divide by 12 to get my average annual FTE count for 2019.

Now i have my average monthly payroll and average monthly FTE. When i go to apply for loan forgiveness, I will need to perform the same calculations on FTE for the 8-week period of the loan I am applying to forgive. If my current FTE count is lower than the 2019 average, I will see a reduction in the forgivable amount. (Payroll cost from 2019 * current FTE)/2019 average FTE = forgivable amount.

Sorry, i know it's a mess. You can PM me if you want to go into detail.

That makes more sense, 0.5% on a 10 year is crazy.

I think initially the banks were very interested given how it was being promoted by the Feds. Fully backed and guaranteed, automated application process, 100% acceptance, they would receive their commissions, etc.

Now they know that there is more diligence required on their part, and risk that was not identified in the early stages. I think you'll see banks that have a heavy commercial presence take advantage of their relationships to get companies these loans.

Local banks that have a heavier personal banking presence will shy away from them.

Maybe I'm wrong, but aren't these incentives enough for every bank to want a piece of the pie?:

How will lenders be compensated?

Processing fees will be based on the balance of the financing outstanding at the time of final disbursement:

Loans $350,000 and under: 5.00%
Loans greater than $350,000 to $2 million: 3.00%
Loans greater than $2 million: 1.00%

Lenders may not collect any fees from the applicant.

https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf

forgive me for the dumb questions, but why would the fed broadcast that the loans will be forgiven? when and why would they be forgiven at all?

Towns03 said:

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forgive me for the dumb questions, but why would the fed broadcast that the loans will be forgiven? when and why would they be forgiven at all?

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Because the entire point is that this is a stimulus to incentivize small companies from laying off workers. The loan structure ensures (in theory) companies aren't gaming the system. Keep staff, and use it for payroll, insurance, rent, and utilities and it turns into a grant (forgiven)

I'm on the board of a nonprofit. We filed our paperwork today.

Towns03 said:

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forgive me for the dumb questions, but why would the fed broadcast that the loans will be forgiven? when and why would they be forgiven at all?

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Revenues for us are down 40%, for some it's 100%. Overhead is a expensive, especially salaries. This essentially gives 2.5 months in salaries as a runway. Hopefully things rebound before then and our 40% down is only down 10% or less. Rather than having to lay-off and then rehire, we can retain our employees.

It's a true win - win - win

1. Employee - keeps job, has mental and financial security in an unnerving time.

2. Employer - does not have to decrease needed help, does not have to ruin relationship by furloughing employee only to rehire later. Keeps talent and knowledge.

3. Government - would be on the hook for unemployment anyways, so does not have to foot the bill for a mountain of unemployed people.

Bonus. We all win because the three things above catapult the entire economy back to where it was on a much quicker pace.

Towns03 said:

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forgive me for the dumb questions, but why would the fed broadcast that the loans will be forgiven? when and why would they be forgiven at all?

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Because we have a kind and compassionate government that values its citizens, its economy, and the businesses that make it all possible. Why do you ask?

Willy Wonka said:

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I'm on the board of a nonprofit. We filed our paperwork today.

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How? Banks can't do anything until Friday.

Bank was eager to get it this afternoon. Most response we've seen out of them in last 5 yrs.

Man, this thing is a dumpster fire. Affiliation rules (found out about this today), payroll taxes, contractors, part year employees (I am probably forgetting other details) - I am getting different information from many different trusted sources including banks, attorneys, etc.

On the surface, yes. What our baker told us is that due to the Feds trying to expedite this as quickly as possible, it opens the door for inaccuracies on the loan process, which would leave the bank open for a much higher risk. The commissions wouldn't touch what they'd be potentially liable for if filed and granted incorrectly.

That doesn't mean they won't do it, just that it isn't as slam dunk as initially thought. I think you'll see some banks decline to participate because of this.

We were informed by the accountants today that the applications and in turn the money will be first come, first served until the money runs out. Our bank is accepting ours today, understanding processing cannot start until tomorrow.

What bank? I talked to boa today and they said everything would be done online starting tomorrow?

What payroll records do we need? And what other information?

ag97tx said:

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What bank? I talked to boa today and they said everything would be done online starting tomorrow?

What payroll records do we need? And what other information?

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Wells Fargo sent out a link to a website they created specifically for this. It has no useful information on it to date, however.

We bank with Frost so it is hands on (now irrelevant figure of speech) with our relationship banker.

This may be a time to reach out to banks like Frost or other regional and local banks.

I've been told three very interesting things in the past two hours:

1. Not all banks are going to participate.
2. Chase has said they may not be ready tomorrow. If Chase isn't they won't be alone.
3. At least some banks are saying that they will only serve clients that had a banking relationship as of 2/15/20.

Just FYI. If you're bank isn't participating this business is an SBA broker and they are focusing on PPP for the next few weeks. Mason Robinson '16 is a good Ag there.

ag97tx said:

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What bank? I talked to boa today and they said everything would be done online starting tomorrow?

What payroll records do we need? And what other information?

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As of 330 the banks didn't know.

I have a question on forgiveness. Due to exclusions on employee income in excess of $100k, the loan amount I qualify for is approximately 15% below the actual payroll for 8 weeks. For the loan to be forgiven, do I need to maintain 100% of the 2019 payroll amounts, or can I lower everybody's pay 15% for the 8 weeks? What drives the forgiveness decision; 100% of 2019 payroll, or the use of 100% of the funds borrowed toward payroll?

Forgiveness is based on two parameters:

• Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
• Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.

So, your FTE counts during the 8 week period needs to be the same as your monthly average in 2019, or a portion of your loan will not be forgivable (payroll cost * current FTE average/2019 FTE average)

Also, if you reduce pay from the payroll calculations you used in 2019, you will have to reduce the forgivable amount.

Also, you can spend up to 25% of the loan amount towards acceptable items outside of payroll (rent, utilities, etc.) and it will still be forgivable. Any more that that, and they will make you deduct that portion from the forgivable amount.

So, as an example: In 2019, I have 10 employees and they all make $125,000 (this is make believe). For loan calculations, I've capped all of them down to $100k, or $8333.33/month. My annual payroll was $15M, but for purposes of the loan, capping my annual acceptable payroll costs gives me $12M, or $1M average monthly payroll, with an average of 10 FTE monthly. My qualifies loan amount would be $2.5M.

Fast forward to April 6th when i get approved and get my money. Today, I have 8 people on staff that all make $125,000. My monthly payroll is actually $1M. Over 8 weeks I'll spend $2M paying my staff. When I apply for forgiveness, I'll have all the records showing that I spent the money on payroll (or even rent or utilities, etc.). They will say that due to reduced headcount from the 2019 average, my forgivable amount will be $2M ($1M payroll cost * 8 current FTE/10 2019 FTE) * 2.5 = $2M of the loan is forgivable because I reduced my staff by 20%, therefore 20% of the loan is owed.

The thinking is that you didn't need that money in the first place because you only needed $2M of it to cover your current payroll vs. what you needed back in 2019 (which you used to calculate the loan).

Interim Final Rule just published.

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp

Question: Wells Fargo, who we bank with, is seemly dragging their feet on this, arguably with good reason. Should I try to contact a different bank to get this ball rolling? I have heard conflicting reports that basically say stick with your existing bank or else you may be put at the back of the line at a 'new' bank, and maybe get left empty handed when the money runs out.

ol'Porkbelly said:

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Question: Wells Fargo, who we bank with, is seemly dragging their feet on this, arguably with good reason. Should I try to contact a different bank to get this ball rolling? I have heard conflicting reports that basically say stick with your existing bank or else you may be put at the back of the line at a 'new' bank, and maybe get left empty handed when the money runs out.

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Every bank is in the same boat. SBA moved their guidance until tomorrow afternoon. No one knows much at this time. Pretty much just best guesses on the application process and what all is needed and how long it will take for the loan to originate.

Is there any easy way to check on an EIDL application? How do they decide with that one how much to fund? Does having a PPP disqualify a small business from an EIDL loan and vice versa?

lazuras_dc said:

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ol'Porkbelly said:

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Question: Wells Fargo, who we bank with, is seemly dragging their feet on this, arguably with good reason. Should I try to contact a different bank to get this ball rolling? I have heard conflicting reports that basically say stick with your existing bank or else you may be put at the back of the line at a 'new' bank, and maybe get left empty handed when the money runs out.

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Every bank is in the same boat. SBA moved their guidance until tomorrow afternoon. No one knows much at this time. Pretty much just best guesses on the application process and what all is needed and how long it will take for the loan to originate.

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agree with this. every bank is totally slammed right now.

Basic (and maybe a dumb question):

So once I do all the payroll paperwork, do I need to keep paying my employees right now to qualify for them reimbursing me? If so, and if hourly employees are not working at all how do I calculate what to pay them? (And still expect to get help) .

Also, on the SBA disaster loans if I have multiple businesses and more than one business is suffering can I apply for each business?

Pelayo said:

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Is there any easy way to check on an EIDL application? How do they decide with that one how much to fund? Does having a PPP disqualify a small business from an EIDL loan and vice versa?

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At first they said yes...it was one or the other.

Then they said you can get both, as long as you don't use them to pay for the same expenses. You also need separate accounts to deposit them in.

But that could all change again tomorrow. So keep checking their site

Jimmy Conway said:

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Also, on the SBA disaster loans if I have multiple businesses and more than one business is suffering can I apply for each business?

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Today they said you could...but that they might cap it, and are waiting on further guidance.

Premium said:

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Maybe I'm wrong, but aren't these incentives enough for every bank to want a piece of the pie?:

How will lenders be compensated?

Processing fees will be based on the balance of the financing outstanding at the time of final disbursement:

Loans $350,000 and under: 5.00%
Loans greater than $350,000 to $2 million: 3.00%
Loans greater than $2 million: 1.00%

Lenders may not collect any fees from the applicant.

https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf

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Making $ with zero risk!

Pelayo said:

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Is there any easy way to check on an EIDL application? How do they decide with that one how much to fund? Does having a PPP disqualify a small business from an EIDL loan and vice versa?

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No. It is just rolled in