SBA Issues New PPP Regulations, What You Need To Know Part 2
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By carmcapriotto
Sara Fraser is a millennial who has a love for life, travel, and connecting with other humans! She has over 15 years of retail management experience, the last 6 of them as an office manager for a used car sales and service center. To bring her customer service, marketing, and business knowledge to the automotive industry she has recently joined the team at Haas Performance Consulting.
Sara loves helping others grow and succeed and is excited to share her expertise on management and social media, her views on how and why the younger generations think and act, and how to work and manage a business within a multi-generational workforce. When she isn’t working Sara spends her time traveling, attending theatrical productions, music festivals, concerts, advocating for human and animal rights, celebrating life in general and connecting with other people from all over the world. Look for Sara’s previous episodes HERE.
Key Talking Points:
Why aren’t millennials applying to my shop? Millennials don’t buy products without looking at reviews- they won’t apply/accept offer without researching shop thoroughly first Have current employees leave google reviews- show off and share your business culture . Shop should look clean and inviting- millennials want walk through interviews to evaluate their potential work space Flexibility in work hours- millennials grew up with parents that were away from the home or working extended hours. Life after work is more important than work. Social media/linkedin/indeed- the more you advertise you’re hiring on different platforms, the bigger net you’re casting and the more feedback you’ll have Advertise your culture- be inviting into your team, millennials are looking for that workplace “home” “Ideal boss”- approachable, comfortable to talk to, honest, trustworthy, positive attitude, personable. Millennials like to share information about their life outside of work and want the same reflected back. You are more than a boss, you are a mentor/role model. Embrace change and adapt to your employees needs - create a space for employees to flourish and succeed Show millennials the auto industry is a viable career- they did not grow up with the knowledge they could be a technician as a career Resources:
Thanks to Sara Fraser for her contribution to the aftermarket’s premier podcast. Link to the ‘BOOKS‘ page highlighting all books discussed in the podcast library HERE. Leaders are readers. Find every podcast episode HERE. Every episode segmented by Series HERE. Key Word Search HERE. Be socially involved and in touch with the show:
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This episode is brought to you by AAPEX, the Automotive Aftermarket Products Expo. AAPEX represents the $740 billion global automotive aftermarket industry and has everything you need to stay ahead of the curve. The Virtual AAPEX Experience 2020 is in the record books. Virtual AAPEX lived up to presenting leading-technical and business management training from some of the industry’s best and brightest. Now set your sights on the homecoming in Las Vegas in 2021. Mark your calendar now … November 2-4, 2021, AAPEX // Now more than ever.
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By carmcapriotto
Dave Hobbs automotive service experience spans 40 plus years in the industry, starting out as a technician and then as a service manager working in his family’s repair shop (Hobbs Auto Electric) in Kokomo, Indiana. After leaving Hobbs Auto Electric, Dave began working as a hotline advisor and field engineer at GM’s Delco Electronics. Those roles eventually led to becoming an electronics systems instructor for thousands of Delco Electronics / Delphi engineers throughout North American and Asia.
Dave is currently the lead technical trainer and course developer for Delphi Product and Service Solutions. In addition, he serves part-time as a contributor to Motor Age Magazine and as a field correspondent for MACS Worldwide (Mobile AC Society). Dave’s previous episodes HERE.
Key Talking Points:
New technologyFirst challenge- finding out how it works. Service information isn’t always the easiest to read and understand. Validate information and see what makes it work Field case studies Training- never quit learning Dave’s acronyms Data acronym FRED- frustrating ridiculous electronic device WRAP- we replace all parts EWFN - everything working fine now Automotive innovationsADAS and calibrating radar when doing repairs Technicians and shop owners have to be in the education business for customers- customers will think their car is a robotic autopilot vehicle Brainstorm ADAS class for customers- educate how ADAS systems work and respect the safety functions in place to avoid customer turning them off Automotive industry IS deemed an essential business Resources:
Thanks to Dave Hobbs for his contribution to the aftermarket’s premier podcast. Link to the ‘BOOKS‘ page, highlighting all books discussed in the podcast library HERE. Leaders are readers. Listen for free on Apple Podcasts, Google Podcasts, Spreaker, iHeart Radio, Spotify, Podchaser, and many more. Mobile Listening APP's HERE Find every podcast episode HERE. Every episode is segmented by Series HERE. Key Word Search HERE. Be socially involved and in touch with the show:
Facebook Twitter Linked In Email
Join the Ecosystem - Subscribe to the INSIDER NEWSLETTER HERE.
Buy me a coffee
NAPA Autotech Training helps your technicians keep their skills sharp and their NAPA Know How up to date. It’s the highest quality technical training that covers almost every vehicle system and every make and model. NAPA Autotech is presented by experienced instructors who are ASE master certified technicians. Even after a class is over, techs can access course information online with ClassPass. So when questions come up later they can get the answers. AutoCare Center owners who have taken advantage of Autotech Training say that well-trained technicians are helping to increase their shop’s repair capability and raise bay productivity. That results in fewer comebacks, more satisfied shop customers, and reduced technician turnover.
Learn more about NAPA AutoCare, NAPA Autotech Training, and the hundreds of other benefits the NAPA family has to offer by talking with your servicing NAPA store or Visit the NAPA Benefits Center, at www.napabenefitscenter.com or call the NAPA Benefits Center at 844-627-2123.
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By nptrb
We ended Part 3 of this blog series with “Second Draw PPP Loan Application and Documentation Requirements”. As this second draw is being distributed, the rules are changing. I encourage you to check out the SBA’s website www.sba.gov or go to your local SBA office for additional information.
You may also contact me if you would prefer to have a conversation with someone outside the government. My contact information is at the bottom of this post.
Beginning Part 4, we start with expanding on this rule from the New PPP Regulations:
For Second Draw PPP Loans of $150,000 or Less, Revenue Reduction Documentation is Not Required to be Submitted at the Time the Borrow Submits an Application for a Loan:
This section is self-explanatory, but just a bit of clarification for you.
When you apply for a loan in an amount that is less than $150,000, you may disregard the required documentation mentioned in the previous blog. There is a three-letter word that causes a pause here “BUT” “Must be submitted on or before the date the borrower applies for loan forgiveness, as required under the Economic Aid Act.”
A second piece is that IF you as a borrower do not apply for loan forgiveness, you must provide this documentation to the SBA when they request it from you. So, be prepared.
How to Request an Increase for a PPP First Draw Loan if the Borrower Returned All or Part of a Loan, or Did Not Accept the Full Amount Previously Approved:
Here are the categories of borrowers that may reapply or request an increase in the amount of the PPP loan:
If a borrower returned all of a PPP loan, the borrower may reapply for a PPP loan in an amount the borrower is eligible for under current PPP rules. If a borrower returned part of a PPP loan, the borrower may reapply for an amount equal to the difference between the amount retained and the amount previously approved. If a borrower did not accept the full amount of a PPP loan for which it was approved, the borrower may request an increase in the amount of the PPP loan up to the amount previously approved. You may use the SBA’s E-Tran Servicing website to request an increase in the PPP loan amount electronically. After the request, you are required to provide the lender with supporting documents for the increase.
As of this writing, the SBA’s process for collecting information from borrowers was under development. This may be available when you apply for an increase in the loan amount as described above.
Clarification on Borrowers that are Ineligible to Receive a Second Draw PPP Loan:
Here is some language from the Economic Aid Act that describes borrowers who are NOT eligible to receive a Second Draw PPP loan. Read carefully please?
A business concern or entity primarily engaged in political activities or lobbying activities, including any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy, or that describes itself as a think tank in any public documents; Certain entities organized under the laws of the People’s Republic of China or the Special Administrative Region of Hong Kong, or with other specified ties to the People’s Republic of China or the Special Administrative Region of Hong Kong; Any person required to submit a registration statement under section 2 of the Foreign Agents Registration Act of 1938 (22 U.S.C. 612); A person or entity that receives a grant for shuttered venue operators under section 324 of the Economic Aid Act; A publicly traded company, defined as an issuer, the securities of which are listed on an exchange registered as a national securities exchange under section 6 of the Securities Exchange Act of 1934
(15 U.S.C. 78f). Pay attention to the punctuation here. At the end of each bullet, there is a semicolon “;”. This means that if the first bullet does not apply to your situation, the next one or the next one, or the next one, OR the NEXT one may.
We’re getting close to the end, but this section has some additional clarification of borrowers that will not qualify for the second draw PPP loan. Check out these are examples:
You are engaged in any activity that is illegal under Federal, state, or local law; You are a household employer (individuals who employ household employees such as nannies or housekeepers); An owner of 20 percent or more of the equity of the applicant is presently incarcerated or, for any felony, presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of, pleaded guilty or nolo contendere to, or commenced any form of parole or probation (including probation before judgment) for, a felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance within the last five years or any other felony within the last year; You, or any business owned or controlled by you or any of your owners, has ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government; Your business or organization was not in operation on February 15, 2020; • You or your business received or will receive a grant under the Shuttered Venue Operator Grant program under section 324 of the Economic Aid Act; The President, the Vice President, the head of an Executive Department, or a Member of Congress, or the spouse of such person as determined under applicable common law, directly or indirectly holds a controlling interest in your business; Your business is an issuer, the securities of which are listed on an exchange registered as a national securities exchange under
section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); Your business has permanently closed.”
Again, same observation regarding the semicolons at the end of each bullet.
Thanks for sticking with me and welcome to the end of this blog series. Whew, that IS a TON of reading.
Again, I am keeping current of the changes as they happen, so if you want to talk, let’s schedule a time to meet soon.
Natalie Paris
https://threeriversbookkeeping.com/
907-331-0208
[email protected]
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By nptrb
We ended Part 2 of this blog series with “Calculation of Average Monthly Payroll Costs for NAICS Code 72 Entities That Qualify as Seasonal Employers or as New Entities:” This is another great reason to check out the SBA’s website www.sba.gov or go to your local SBA office for additional information.
Beginning Part 3, we start with expanding on this rule from the New PPP Regulations:
“Bankruptcy Prevents Borrowers from Receiving a Second Draw PPP Loan:”
The Interim Final Rules (IFR) state that if your business is in bankruptcy, you will not be approved for a PPP loan. Congress gave the SBA to defer that decision to bankruptcy judges but did not choose to exercise that option.
Again, don’t shoot the messenger please? I was shocked by this decision myself. I encourage you to look at the language from the IFR but will not insert them here.
Here’s a quote from the IFR to give you a taste.
“If the applicant or the owner of the applicant is the debtor in a bankruptcy proceeding, either at the time it submits the application or at any time before the loan is disbursed, the applicant is ineligible to receive a PPP loan.”
There is more that discusses the timing of when you file for bankruptcy and that’s where the hairs start getting split. If you find yourself in this possible gray area, check out the IFR.
There is a new way to account for a 25% reduction in revenue that will qualify you for a second PPP loan. Here’s the language:
“A borrower that was in operation in all four quarters of 2019 is deemed to have experienced the required revenue reduction if it experienced a reduction in annual receipts of 25 percent or greater in 2020 compared to 2019 and the borrower submits copies of its annual tax forms substantiating the revenue decline.”
Here’s the idea. If your shop had a reduction of annual receipts (when comparing 2019 to 2020) while in operation in 100% of 2019 and 2020, then you meet the criteria. Another wrinkle is that you must have already qualified before taking the revenue reduction into account. The IFR does make this simpler than it was before. If you want to find out the reasons the SBA created a variable method of figuring their reduction in revenue, check out the IFR or we can have a conversation. I’m here for you.
Lastly, you can still qualify for the second draw when you have a reduction of 25% in revenue by proving that you had the reduction in one quarter of 2020 when compared to the same quarter in 2019. For example, if you had the revenue reduction in the 1st quarter of 2020 when compared to the 1st quarter in 2019, you qualify.
Here’s the second and last topic for this blog. My eyes are starting to cross so hang in there.
Second Draw PPP Loan Application and Documentation Requirements:
If you are wanting to make application, you should do that as soon as the application is available. It may be available now, so check it out.
The IFR did specify the documentation requirements, so here we go.
The documentation standard is essentially the same as the first draw PPP loan. If you meet these requirements, no additional proof of payroll costs is required. These requirements come straight from the IFR:
If the applicant:
(i)used calendar year 2019 figures to determine its First Draw PPP Loan amount, (ii) used calendar year 2019 figures to determine its Second Draw PPP Loan amount (instead of calendar year 2020), and (iii) the lender for the applicant’s Second Draw PPP Loan is the same as the lender that made the applicant’s First Draw PPP Loan. When you meet the standards from above “Additional documentation is not required because the lender already has the relevant documentation supporting the borrower’s payroll costs.”
Even if you do meet the standards from above, the IFR allows lenders that latitude to request additional documents if the lender “concludes that it would be useful in conducting the lender’s good-faith review of the borrower’s loan amount calculation.” Here some plain language. The bank can ask for more documents to review your calculation of the loan amount.
When you are asking for a second round PPP loan that is greater than $150,000 you have to submit documents that are “adequate to establish that the applicant experienced a revenue reduction of 25% or greater in 2020 relative to 2019.” An example of the documents is:
Relevant tax forms, including annual tax forms, or Quarterly financial statements or bank statements if relevant tax forms are not available. Hello Ms. Bookkeeper, do you have a handle on this stuff?
I’m confident I do, so if you want to talk, let’s schedule a time to meet soon.
In part 4 of the series, we’ll start with:
For Second Draw PPP Loans of $150,000 or Less, Revenue Reduction Documentation is Not Required to be Submitted at the Time the Borrow Submits an Application for a Loan:
See you back here for Part 4.
Natalie Paris
https://threeriversbookkeeping.com/
907-331-0208
[email protected]
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By nptrb
Hi, Natalie here. There is wealth of information to clear up confusion about the new regulations regarding PPP loans. There will probably be changes, so this is summary is based on the best information currently available. Before you take action, I encourage you to check for updated rules and make sure you are fully informed before signing any paperwork.
As with any government program, there are a lot of details that need to be understood. So this may be spread out over two-to-three blogs, as my goal is to deliver this information in bite-sized chunks. For additional information, I suggest you contact your local Small Business Association (SBA).
Here’s a headline of the first section from an article in Forbes magazine:
“Second Draw PPP Loan Eligibility Requires that Borrower will have spent the “Full Amount” of the First Loan Before Receiving the Disbursement of the Second Loan”
The title for this Act is a mouthful of legalese, but the short title is the “Economic Aid Act”. This Act states that “a Second Draw PPP Loan may only be made to an eligible borrower that (1) has received a First Draw PPP Loan, and (2) has used, or will use, the full amount of the First Draw PPP Loan on or before the expected date on which the Second Draw PPP Loan is disbursed to the borrower.
Let’s break this down into simpler language.
You have to be eligible You have received the first PPP loan You will spend 100% of the first loan before collecting any of the funds from the second PPP loan Here is some clarification from the Interim Final Rules:
The borrower must have spent the full amount of its First Draw PPP Loan on eligible expenses under the PPP rules to be eligible for a Second Draw PPP Loan; and “The full amount” of the borrower’s First Draw PPP Loan includes the amount of any increase on such First Draw PPP Loan made pursuant to the Economic Aid Act. This next topic is what the definition of “Gross Receipts” is. “Gross Receipts” Defined for Purposes of Determining Whether There Has Been a 25% Drop in Revenues to Qualify for Second Draw
Unfortunately, the Economic Aid Act does not include a general definition of “gross receipts” for purposes of determining a borrower’s revenue reduction.
Here is what is included in gross receipts: ““All revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances.”
Here is what is not included in gross receipts:
“Taxes collected for and remitted to a taxing authority if included in gross or total income (such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees); Proceeds from transactions between a concern and its domestic or foreign affiliates; and Amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker.” One additional statement regarding what may not be excluded from gross receipts has to do with contractor costs and other items under the category of “all other items”. These items include:
reimbursements for purchases a contractor makes at a customer's request investment income employee-based costs such as payroll taxes Lastly for part 1, this definition of gross receipts is consistent with SBA’s size regulation 13C.F.R. 121.104. This is another great reason to check out the SBA’s website www.sba.gov or go to your local SBA office for additional information.
I may be able to shed some additional light on these new rules, so contact me if you want to talk this over.
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