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Coronavirus Letter

04/7/2020

Another day, and more guidance received. Overnight the U.S. Treasury issued a 6-page document with F.A.Q.’s regarding the Paycheck Protection Program: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf Several relevant “takeaways” from our perspective:

• Accurate information is the responsibility of borrower. Lender must do due diligence to verify information. If errors in calculation, lender should remedy error with borrower.

• Borrower has to determine all its affiliate entities (over 50% ownership) and do total FTE headcount and notify lender of this affiliate relationship.

• PPP covers payroll for vacation, medical and sick leave. However, if you get tax credits as a result of paid sick leave or the Expanded FMLA benefits contained in the Families First Coronavirus Response Act (“FFCRA”), these payroll amounts will be excluded from calculations relating to the PPP.

• A single signature on a PPP application for the entire business is OK from the designated “authorized representative” of the business.

• Borrowers can calculate aggregate payroll costs from either previous 12 months or calendar year 2019. It seems whichever they chose is acceptable.

• Employer Social Security and Medicare taxes (“FICA” taxes) are not included in “Gross Monthly Wages” Calculation. However, if the application has already been submitted it is OK to rely on the guidance available at the time of application to submit a proper application. If the application has not been filed as of yet the application should be revised to exclude EMPLOYER FICA taxes. • It does imply that we continue to include state unemployment tax with the calculations of “Gross Monthly Payroll”. Please reach out to your consultant with any questions. Thank you in advance for your patience and understanding as we all are working to get through these times together. We leave you with a quote by famous former coach of UCLA basketball John Wooden: “Things turn out best for the people who make the best of the way things turn out”

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