Preparing for COVID-19 Recovery

Loan Options &

Forgiveness Strategies

Weekly Update: July 9, 2020

This slide deck contains information on the COVID-19 related Loan

Options & Forgiveness Strategies and is the most up-to-date as of

July 9, 2020.

Changes are constant and additional guidance is on-going. We will

keep you posted on changes through our weekly webinar updates and

COVID-19 resource center. You can also reach out to your Sax

advisor for the most recent information.

Please visit our Resource Center at www.saxllp.com for on-going

updates, or email covid19@saxllp.com with questions.

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Our firm provides the information in this webinar presentation for

general guidance only, and does not constitute the provision of legal

advice, tax advice, accounting services, investment advice, or

professional consulting of any kind.

The information provided herein should not be used as a substitute

for consultation with professional tax, accounting, legal, or other

competent advisers.

Before making any decision or taking any action, you should consult

a professional adviser who has been provided with all pertinent facts

relevant to your particular situation.

Meet Our Recovery Task Force

Todd W. Polyniak, CPA

Partner

Stephen J. Ehrenberg,

CPA, MBT

Partner

Josh Chananie, CPA

Partner

Today’s Agenda

• Introduction

• Updates

– PPP Loan Application Date Extension

– Release of PPP Loan Data

– Main Street Lending Program

• Economic Injury Disaster Loan Recap

• PPP Loan Forgiveness

– Questions That Keep You Awake at Night

Updates

UpdatesPPP Loan Application Date Extension

• Borrowers had until June 30, 2020 to receive funding

• July 4th Presidential signature of bill S. 4116 extended the loan application date to

August 8, 2020

• Over $130B in funding still available

• SBA Lender Match online tool

– www.sba.gov/funding-programs/loans/lender-match

UpdatesBorrower Information Disclosure

• On July 6, 2020 SBA, Treasury published the following for PPP loans >$150K

– Business name & type, address and zip code;

– NAICS Code;

– Demographic Data;

– Not-For-Profit Information;

– Jobs supported; and

– Loan amount ranges (categories below account for ~75% of loan dollars approved):

• $150K - $350K

• $350K - $1M

• $1M - $2M

• $2M - $5M

• $5M - $10M

• PPP Loans <$150K

– SBA released state or territory totals aggregated by zip code, by industry, by business type and by

various demographic categories

UpdatesBorrower Information Disclosure – cont’d

• Key Aspects of the PPP Loan Data

– Released to provide transparency to the public

– SBA intent on protecting small businesses• Committed to ensure no harm done to small businesses or their employees

– Delegated loan making process

– List is not indicative of loan forgiveness and/or PPP compliance

– Cancelled loans are not reflected on the list

– Loan demographic data is voluntary

• 75% of all PPP loans did not include demographic information

• SBA is working to collect more demographic information to see which businesses benefitted from

the PPP funding

UpdatesMain Street Lending Program

• Federal Reserve announced on July 6, 2020 that the Program is fully operational

• Federal Reserve Bank of Boston has a state-by-state list of lenders participating

in the Program– Listing is elective, so other banks may be participating

• Still awaiting confirmation if/how the non-profit programs will operate– Non-Profit Organization New Loan Facility (“NONLF”)

– Non-Profit Organization Expanded Loan Facility (“NOELF”)

Economic Injury Disaster

Loan Recap

Economic Injury Disaster Loan ProgramRecap

• Economic Injury Disaster Loan Program

– On June 15, 2020, SBA re-opened the program to all eligible small businesses

• Restrictions for agricultural-only business have been lifted

– $150,000 maximum funding

• Funding process has begun

• Collateral/personal guarantee requirements have changed

– $10K advance limit up to $1k x 10 employees

– Applicants are not required to be approved for an EIDL in order to receive the $10K

advance

– No forgiveness aspect (other than potential $10K advance)

– Detailed application process through SBA

– 30 year amortization, 2.75% - 3.75% interest rate

Economic Injury Disaster Loan ProgramUse of Proceeds / Interaction w/ PPP

• Loan proceeds may be used to:

– Provide paid sick leave to employees unable to work due directly to COVID-19;

– Maintain payroll to retain employees during business disruptions or substantial slowdowns;

– Meet increased costs to obtain materials unavailable from the applicant’s original source due to

supply chain interruption

– Make rent or mortgage payments; and

– Repay obligations that cannot be met due to revenue losses

• Interaction w/ PPP

– If an EIDL was received from January 31, 2020 – April 3, 2020 and it was not used for payroll

costs, there is no impact on the PPP loan

– If an EIDL was received from January 31, 2020 – April 3, 2020 and it was used for payroll costs,

the PPP loan must have been used to refinance the EIDL

– $10K advance will reduce PPP loan forgiveness amount

PPP Loan Forgiveness:

Questions That Keep You Awake at Night

PPP Loan ForgivenessQuestions that Keep You Awake at Night

1) Are my certifications still good? Has my business really been effected by COVID-19?

2) When can I apply for forgiveness?

3) If I am a self-employed individual that is currently claiming unemployment and received the

PPP loan, can I claim unemployment benefits and the PPP?

4) How do I document the rehire exemptions?

5) Will I get audited by the SBA? Will I end up wearing an orange jumpsuit after this is all over?

6) If I go out of business, am I personally on the hook for repayment if forgiveness is not

achieved?

7) If I lay people off right after I spend the money, is the SBA going to look at that negatively and

impact my forgiveness?

8) If I refinance my current debt with a new bank, will I be able to move the PPP loan to the new

bank as well, or am I beholden to the bank I applied to?

PPP Loan ForgivenessQuestions that Keep You Awake at Night

9) If I shifted employees from one related entity to another in March and each entity has its own

loan, are my FTEs negatively impacted? Why can’t I apply for forgiveness as an affiliated

group?

10) I haven’t transferred my PPP money yet out of the PPP account I have been funding all of the

business expenses. Being that I am part way through my covered period, am I in trouble / have

I not complied with the certification?

11) Can I expend all my funds within the approved thresholds but still not receive 100%

forgiveness?

12) If I am a non-profit who has received the money and I double dip, will I get in trouble with my

government or other funding contracts?

13) If I apply for forgiveness too soon and am one of the lucky ones that is selected for an audit, are

they more severe in their evaluation process than if I applied later?

14) If my PPP fund runs out, what happens if I am still unable to get my business up and running?

15) How do I budget for the upcoming year since there are still so many uncertainties?

PPP Loan ForgivenessQuestions that Keep You Awake at Night

16) How do I decide whether I should enter into any new contracts since I don't know if I will

have customers that will pay me?

17) What happens if my bank refuses to renew my Line of Credit or extend my debt terms since

my numbers look so bad because of the downturn in the economy?

18) Should I be looking to get out of my leases since I may no longer need the space after the

money runs out?

19) The forgiveness application process is long and confusing. What happens if I make a

mistake that causes me to not get full forgiveness?

20) After all the time spent with the calculations, record keeping and after spending the money,

what if I am told that I did not qualify for the PPP loan from the beginning?

21) What happens if the PPP Loan is not forgiven and I don’t have the money to pay it back?

22) What if my bank wants a lot more information in their version of the PPP forgiveness

application that I will not be able to provide?

Upcoming Webinar

Thursday, July 16 @ 10 AM

Weekly Recovery Update: COVID-19 Loan Options and Forgiveness Strategies

• For additional questions: Email Covid19@saxllp.com

• Visit Sax’s COVID-19 Resource Center found on Saxllp.com to register for

webinars and for on-going information and resources.

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