New PPP FAQ’s and Open Streets News
Do the Hustle!!!!
We need some industry specific assistance and we need to hustle it up now. We love small business owners and we support all the mamas and the papas but our industry is extra, super-duper challenged and we need our dearly elected to treat us differently. Brother Jimmy’s and Jimmy Jazz have very different problems.
Let’s start with PPP. The Senate and the House seem intent on passing some kind of stand alone legislation to enhance the PPP and, as per Senator Schumer, the Congressional do-si-do should end next week and the gals and guys should be sashaying arm in arm to the Capitol to pass something that will help. I’m betting on an extension to 20 weeks to use the funds but I don’t think they will change the 75/25. Apparently, Queen Bee McConnell is not feeling it. Read the FAQ’s below to see where we stand.
The Mayor has been all over the place. He said last week that restaurants can hang on for a few months and insinuated that we would all be ok if we just toughed it out. How tone deaf and idiotic a thing to say. It could not be further from the truth. We are running on empty and need the city to hustle up some solutions just for us. Then, today, he said restaurants and small businesses do need help and he’s looking into how to reopen with safety first and yackety yak and blah, blah, blah. Concentrate Mr. Mayor. Be the ball. Just work on opening the streets for now.
Speaking of, our friend and hero, Henry Rinehart is all over it. He’s spearheading the Open Street movement and it’s gaining traction. So, now is the time to put our full force behind it. Here is what he wants us to do. It’s only two things so don’t be lazy:
1) Answer the Hospitality Alliance Survey on where you want your Open Streets – General Rigie is also battling here and he needs this information to present to the politicians. Take a minute and do this please.
2) Communicate your plan for Open Streets for your business to DOT • Answer the DOT’s survey on where you want your Open Streets: https://www.surveymonkey.com/r/nycopenstreetscommunityrequest
Once they know you want Open Streets and that you have a plan, they might actually open your street! It’s been happening already and we want to be ready when outdoor dining is permitted. More to come on this tomorrow.
1932 Update – Don’t think that the passage of NYC’s bill which releases personal guarantors from their obligations on a commercial lease is the end of the game. As much as we want this to be a get out of jail free card, it is not and you should not just hand back the keys, drop the mic and strut out of the scene as good as that might feel to do. We still have some things to negotiate with Landy and want to end up with a surrender agreement and a general release so you can walk away with total peace of mind. We would advise having a call to discuss further in the coming days before handing back your keys or doing anything rash.
Joey Regs says:
As we’ve been covering, there have been numerous changes to the PPP over the last 10 days or so. And they’ve been pretty significant. And there’s even more coming! To help hold you all over until Congress is done doing what they do this week, and hopefully providing us ultimate clarity here, please see a new installment of our PPP FAQs:
Q. We got approved for an Economic Injury Disaster Loan (EIDL) after we received the PPP. Can I use both?
Yes. Just not for the same “stated purposes,” meaning that you can accept both loans, but just use the funds for different things – one for payroll and rent; one for general cash flow. If you received an EIDL cash advance, however, that cash advance amount will be automatically deducted from your potential loan forgiveness amount.
q. Can I use my PPP funds to pay 5 months of rent?
According to the SBA’s most recent guidance, yes – pre-payments and deferred rent payments can now be covered, as long as you actually PAY them during your 8-week covered period.
Q. Do we have to hire back the same employees to reach our FTE targets? Or can we hire new people and/or create new positions?
Ideally, you would attempt to rehire your original employees first, since the SBA is encouraging borrowers to use the PPP funds to retain and rehire. That being said, you can absolutely create new positions, particularly in light of the fact that your operations have undoubtedly changed – and will continue to do so – in response to the crisis.
Q. Does a part-time employee with 5 hours per week count as 0.5 FTE?
If you choose to use the SBA’s recent “simplified” FTE calculation, yes. You are still able to use the exact FTE calculation if you choose — which would likely be beneficial if you have a large number of employees working under 20 hours/week — but you’ll need to be consistent throughout all measuring periods.
Q. How much do I need to pay my employees during the covered period to qualify for loan forgiveness?
It’s our understanding that you should be taking each re-hired employee’s Q1 2020 gross earnings, multiplying it by 4 to get an employee’s annualized “salary” (capped at $100k). That annualized salary is divided by 52 (for a weekly rate), then multiplied by 8 [weeks] to get you the employee’s target take-home during the covered period. That total CAN be reduced by up to 25%, while still complying with the forgiveness guidelines.
*If the employee is a new hire – and has never received a paycheck from the borrowing entity before – there is no salary threshold requirement. You are, however, bound by all wage and hour rules under applicable law.
Q. When it comes to the salary threshold test, is that based on an employee’s weekly pay or their total compensation over the 8-week covered period?
Total cash compensation over the course of the 8 weeks.
Q. If an employee is offered employment and declines, their FTE count can be counted toward the total. But what happens to the money that was allocated for them?
Those amounts can be reallocated and redistributed to cover other payroll costs (I.e., increasing other employees’ comp, hiring new employees, etc.)
Q. Are we responsible for payroll taxes while using PPP funds?
State and local taxes can be paid using PPP funds (and are included in covered payroll costs), but federal employer-side taxes are not covered and must be paid out of pocket.
*Please also note that workers comp is not included as a forgivable payroll costs.
Q. What kind of repercussions might we face (aside from repaying the loan) if we decide to hang on to the money for expenses since we have no opening date in sight?
No repercussions, necessarily — and you are one of many people who are planning to hang on to their PPP funds. Just be mindful of the fact that you are still bound by the 75/25 ratio, irrespective of whether you’ll be applying for forgiveness or not.
Joey Regs Out
If you want to see the hustle I was attempting to do at Billy’s Ice Cream Disco in 1975, here it is: https://www.youtube.com/watch?v=wj23_nDFSfE