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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]

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]

Hi, Natalie here. We ended Part 1 of this blog with the SBA’s definition of gross receipts which 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. Beginning Part 2, we start with expanding on this rule from the New PPP Regulations: “Any Forgiveness Amount” of a First Draw PPP Loan is Excluded from a Borrower’s Gross Receipts.” Simply stated, you can breathe a sigh of relief. Forgiveness amounts from your first draw PPP loan are not included a gross income when adding up what your gross receipts were. Think of this as a tax deduction taken right off the top of your gross receipts. Yes, I went there, taxes. As I write this, I’m preparing my client’s books for the tax pros who will be busy from February through April 15th. But, I digress, back to the SBA interim rules If you want to dive into the SBA rule on forgiveness amounts, check out section 7A(i) of the Small Business Act. The takeaway from this section is that PPP forgiveness amounts are expressly excluded (they don’t count) from being taxed as income. This also makes sure you are not disqualified from receiving the second draw PPP loan because of forgiveness during the first draw PPP loan. Restated, you have a better opportunity to qualify for the second round of PPP loans. The next line in the interim rules reads: “Borrowers May Use any 365 Day Period Beginning on January 1, 2019 to Calculate Their Average Monthly Payroll Costs:” The following is general in nature and not related to your specific situation, so stick with me, please? The maximum amount any individual borrower my receive from the second draw PPP loan is the smaller amount of two and one half (2.5) months of the borrower’s average monthly payroll costs during that 365-calendar day period not to exceed $2 million. You have two options for calculating the time period. “The 1-year period before the date on which the loan is made.” “Calendar year 2019.” You have some flexibility here as you can choose any 365-day period starting on 1/1/19. It may be an exact calendar year or may be any period of 365 days between 1/1/19 and today. An example based on the federal government fiscal year is starting on 10/1/19 and ending 9/30/20. Here’s quote from the Interim Financial Rules if you’d like to read the ‘official’ language: “Subsection (f) of the IFR uses “calendar year 2020” to refer to “the twelve-month period prior to when the loan is made.” Calculating payroll costs based on calendar year 2020 rather than the twelve months preceding the date the loan is made will simplify the calculations and documentation requirements for borrowers because payroll records are more commonly created and retained on a calendar-year basis. Allowing borrowers to calculate payroll costs based on calendar year 2020 is also not expected to result in a significant difference in payroll costs compared to the twelve months preceding the date the loan is made because all Second Draw PPP Loans will be made in the first quarter of 2021.” To wrap up this blog, we’re going to dive into another section of the Interim Financial Rules: “Calculation of Average Monthly Payroll Costs for NAICS Code 72 Entities That Qualify as Seasonal Employers or as New Entities:” If you are a seasonal employer or new entity that is not a NAICS Code 72 business this is for you, but wait. A NAICS Code 72 business is defined as “businesses in the accommodation and food services sector”. Here’s where it gets a bit deep and potentially confusing. A NAICS Code 72 business may also be considered as seasonal employer or a new entity. I know, what appears to be typical government legalese and double speak. Hang in there as I do my best to translate this for you. The Interim Final Rules clarify this by stating that when your NAICS Code 72 business fits into one of these separate categories… Here’s where the seasonal employer/new entity and NAICS Code 72 business are joined. These businesses MAY calculate their payroll costs used to determine their loan amount… …based upon the formula that applies to the entity, OR the standard formula used to calculate payroll costs for every other type of borrower… while still being allowed to use the 3.5 times multiplier that is applied to NAICS Code 72 entities under the new Act. Wading through government regulations can be challenging and this blog series will continue with Part 3. We’ll start with: “Bankruptcy Prevents Borrowers from Receiving a Second Draw PPP Loan:” I may be able to shed some additional light on these new rules, so contact me if you want to talk this over or do my best to answer specific questions about these new rules. See you back here for Part 3. Natalie Paris https://threeriversbookkeeping.com/ 907-331-0208 [email protected]

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.

Hi, Natalie here. You have a great selection of tools on hand that will cover every job a customer will bring into your shop. Whether it’s Mac Tools, Snap-on, OTC, or Wright, the right tool for the job is priceless. The tools we’re talking about in this post are for finances, but the same strategy holds true. If you’re planning to do your own bookkeeping, the right tool for your financial job is also priceless. They can take what may appear to be a daunting challenge and save you a ton of time. You’ll be back to running your shop before you know it. Stick around until the end and I’ll outline what’s in my bookkeeping toolbox. Here is an overview with some suggestions on how to choose great financial tools Here are the top 10 categories: 1. Accounting Software QuickBooks has been the go-to software for accounting for decades. There are online tools that may be a better option for you. The most popular choice is Xero and the numbers of small business owners that are using Xero is increasing. Compare several and pick the one that is both robust and flexible. According to the 2015 edition of the Business News Daily’s Buyer’s Guide here are the features you should look for:  Invoicing  Expense Tracking  Client/Vendor Contact Management  Billing and Recurring Payments Automation  Quote and Estimate Creation  Tax Preparation  Multiple-User Access  Payroll Processing  Mobile Access  Integration with Programs Such as Point-Of-Sale Software, Credit Card Processing, and Google Apps 2. Budgeting Tools Creating a budget is the cornerstone of your shop’s financial success. Staying on task within your budget is equally as important. If your accounting software has this feature, you may already have the proper tool to create that budget. If your preference is a tool dedicated to this task, a recommendation is PlanGuru. 3. Payroll Management System Payroll management can occupy so much of your time and mistakes are easy to make. Look for tools that streamline the payroll process and cut costly errors. A tool that integrates with your other tools is another feature to look for. Some tools like SurePayroll can calculate and pay payroll taxes. Simple. A couple of other tool suggestions are ZenPayroll and ADP. These combine payroll and HR functions in one. 4. Agile Billing Speed and flexibility in your billing process means quicker cash flow back to you. With a tools like FreshBooks or Bill.com the billing process will be quicker and give your customers an easy experience. Improving the billing process will serve you and your customers better and shorten delays in receiving payments. 5. Financial Dashboard The dashboard gives you a quick look at your shop’s financial health. See at a glance if your shop is thriving or surviving. Tools such as LivePlan or InDinero give you clear visuals and show you if you’re starting to go off course. Then you can take the actions to keep moving towards your financial destination. 6. Cash Flow Analysis Your accounting software should have cash flow statement capability. As with the budgeting tools there are specialty tools for cash flow tracking. A couple of suggestions are Float or a simple spreadsheet. These give you patterns from the past to offer a forecast of your shop’s financial future. 7. Inventory Management This is all about efficiency and tracking. From the purchase of parts and consumables to generating sales reports and low inventory alerts, this is a very valuable tool. A couple of cloud-based options are SOS Inventory and Scout’s top Shelf. 8. Expense Tracking Those tiny expenses can quickly add up and may be hard to track. Using an expense report tool such as Expensify or Xpenditure makes this much easier. Track those meals, gas, and incidental expenses by scanning receipts and typing in cash expenses. Some tools have the capability to link to mobile devices helping to track these instantly.. 9. Business Credit Card A business credit card, when used properly has several benefits  Improve your shop’s credit history  Earn higher credit limits  Receive rewards and discounts  Manage employee cards (ease of tracking expenses)  Boosts employee morale due to convenience and trust 10. E-commerce Solutions Imagine your customer paying for their oil change before the service is completed. They need a couple of quarts of oil to tie them over. It’s easy to buy them online from their trusted repair shop. Many businesses have seen an increases in cash flow since the beginning of the pandemic by using E-commerce solutions. These are powerful and create revenue streams that you may not have thought of. 11. Three Rivers Bookkeeping With my 5-years of experience, these are the tools I use:  Accounting software – QuickBooks  Payroll Management System – ADP  Agile Billing – bill.com  Financial Dashboard – LivePlan I’m passionate about books and service to my clients. If you’d like to have a conversation about tools and why I selected the one’s above, contact me. I can also outline the services I provide and why adding me to your team may make perfect sense to you. Saving you time and headaches is the value I bring to you, the Auto Repair Shop Owner.