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Wolters Kluwer — Conference Presentation (January 2021)
55 slides from Wolters Kluwer's conference presentation, Jan 14, 2021
Slide 1: New Paycheck Protection Program: Expert Overview and TSoftPlus Enhancements
New Paycheck Protection Program: Expert Overview and TSoftPlus Enhancements Hosted by Wolters Kluwer Wednesday, January 14, 2021
Slide 2: Notice
Notice Covers guidance posted through January 14, 2021 ▪ The information presented in this webinar summarizes general guidance under the CARES Act, including Guidance from the Small Business Administration and other sources, based on the existing information available at the time of the presentation
Slide 3: Today's Presenter
Today's Presenter Michael Fuchs Director of Commercial Lending Wolters Kluwer 3
Slide 4: Webinar Agenda
Webinar Agenda Part I ▪ Overview of PPP ▪ Review of new PPP Regulations & Forms ▪ Q&A 4
Slide 5: Purpose of the Paycheck Protection Program (PPP)
Purpose of the Paycheck Protection Program (PPP) ▪ Stabilizing and assisting the American economy ▪ Keeping American workers paid and employed ▪ Helping small businesses meet short-term ongoing expenses including payroll costs and other costs ▪ Managed jointly by the Small Business Administration (S
Slide 6: COVID Relief Bill: Changes to PPP
COVID Relief Bill: Changes to PPP ▪ Economic Aid to Small Businesses, Nonprofits, and Venues Act (“Economic Aid Act”) ▪ Signed by the President on December 27, 2020 ▪ $284.5 billion allocated to PPP (through March 31, 2021) ▪ Covers both 2nd draw loans and new initial loans ▪ PPP Portal opened Jan 1
Slide 7: SBA Guidance for 2021
SBA Guidance for 2021 ▪ Regulations under emergency powers (Jan 6, 2021) o PPP-IFR-Paycheck-Protection-Program-as-Amended-by-Economic-Aid-Act o PPP-IFR-Second-Draw-Loans ▪ New/updated PPP Forms (Jan 8, 2021) ▪ SBA announced Forgiveness Platform API for origination for PPP (Jan 8, 2021) o All PPP Len
Slide 8: New PPP Approval Process thru new SBA Origination Platform
New PPP Approval Process thru new SBA Origination Platform ▪ SBA has expanded the SBA Forgiveness Platform with new PPP Origination capability ▪ TSoftPlus uses the SBA Origination API to the expanded SBA Platform to submit PPP loan requests to SBA ▪ Authorizing Official enables API key for Originati
Slide 9: Eligible Lenders
Eligible Lenders ▪ All lenders that previously participated in the PPP program are eligible to participate in 2021 PPP program ▪ Lenders that are not 7(a) lenders and did not participate in the PPP Program need approval from SBA o Form 3506 for Insured Depositary Institutions o Form 3507 for Other L
Slide 10: Lender Processing Fees
Lender Processing Fees ▪ Provides for PPP lender reimbursement by SBA for new PPP loans (initial loans and 2nd draw) ▪ Establishes a tiered reimbursement rate for PPP loans: o Loans of less than $50,000 that is equal to the lesser of 50% of the loan principal or $2,500 o loans of more than $50,000 a
Slide 11: Lender Processing Fees Examples
Lender Processing Fees Examples Amount 2020 Initial Loans 2021 Initial & Difference 2nd Draw Loans $4,000 $200 $2,000 $1,800 $5,000 $250 $2,500 $2,250 $10,000 $500 $2,500 $2,000 $40,000 $2,000 $2,500 $500 $50,000 $2,500 $2,500 $0 $100,000 $5,000 $5,000 $0 $1,000,000 $30,000 $30,000 $0 $2,000,000 $20
Slide 12: Initial Loans vs Second Draw Loans
Initial Loans vs Second Draw Loans Initial PPP Loans 2nd Draw PPP Loans Maximum Loan Amount $10 million $2 million Calculation of Loan Amount 2.5 x Avg Monthly Payroll 2.5 x Avg Monthly Payroll 3.5 x for NAICS 72 Interest Rate 1.0% 1.0% Term 60 months 60 months Size Standards 500 employees (per 300
Slide 13: Lender Hold Harmless
Lender Hold Harmless ▪ Lender Hold Harmless provisions clarified o Lender may rely on Borrower certification or documentation o Attesting that certification or documentation is in accordance with PPP requirements o Applies to origination or forgiveness process ▪ Lender protection from enforcement if
Slide 14: SBA Form 2483: Updated 1/8/21 for 2021 Initial PPP Loans
SBA Form 2483: Borrower’s Application Form Updated 1/8/21 for 2021 Initial PPP Loans Differences from the June 24, 2020 version shown on subsequent slides SBA Form 2483: Borrower’s Application Form 14
Slide 15: New Entity Types Added to Form
New Entity Types Added to Form Housing cooperatives 300 employees 501(c)(6) organizations (trade & industry associations) 300 employees with limited lobbying FCC broadcast station license holders and newspapers 500 employees per physical location Destination Marketing Organizations 300 employees wit
Slide 16: Year Established
Year Established Instructions indicate self-employed individuals and independent contractors may enter “NA” but so far the API requires a full date. Ties to the requirement that business existed on or before February 15, 2020. SBA Form 2483: Borrower’s Application Form 16
Slide 17: NAICS and Size Standards
NAICS and Size Standards For purposes of reporting NAICS Code, applicants must match the business activity code provided on their IRS income tax filings, if applicable. SBA Form 2483: Borrower’s Application Form 17
Slide 18: Loan Amount: 2.5X Avg Monthly Payroll Plus EIDL Advances
Loan Amount: 2.5X Avg Monthly Payroll Plus EIDL Advances If Applicant is refinancing an Economic Injury Disaster Loan (EIDL): Add the outstanding amount of an EIDL made between January 31, 2020 and April 3, 2020 to Loan Request as indicated on the form. Do not add the amount of any EIDL Advance. SBA
Slide 19: Repeal of EIDL Advance Deduction from Forgiveness
Repeal of EIDL Advance Deduction from Forgiveness ▪ Economic Aid Act repeals section 1110(e)(6) of the CARES Act, which requires PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount. ▪ EIDL Advance borrowers to be made whole without regard to whether those borro
Slide 20: Average Monthly Payroll
Average Monthly Payroll ▪ Average Monthly Payroll, calculated by using the average monthly payroll for 2019 or 2020 at Borrower’s election. ▪ For seasonal businesses, Borrower may elect to use average total monthly payroll for any twelve-week period selected by the Applicant between February 15, 201
Slide 21: Farmers, Sole Props & Partnerships
Farmers, Sole Props & Partnerships Entity Type Tax Form Payroll Calculation Farmers & 1040, Schedule F Eligible payroll costs + lesser of (a) $100k or Ranchers (b) gross income on Schedule F minus eligible payroll costs Sole Proprietors 1040, Schedule C Eligible payroll costs + lesser of (a) $100k o
Slide 22: Allowable & Forgivable Use of Proceeds
Allowable & Forgivable Use of Proceeds ▪ Expanded allowable uses of PPP loans (initial loans and 2nd draws) o Operational expenses for software (installed or cloud) o Property damage from looting and vandalism o Supplier costs of goods o Worker protection from COVID expenses such as drive thru windo
Slide 23: Franchise Yes/No Questions
Franchise Yes/No Questions 2021 2020 Original question 8 split into 2 questions with added text box to enter SBA Franchise Identifier Code SBA Form 2483: Borrower’s Application Form 23
Slide 24: SBA Form 2483: Borrower's Application Form
SBA Form 2483: Borrower’s Application Form 24
Slide 25: SBA Form 2483: Borrower's Application Form
SBA Form 2483: Borrower’s Application Form 25
Slide 26: PPP Borrower Demographic Information Form (Optional)
PPP Borrower Demographic Information Form (Optional) SBA Form 2483: Borrower’s Application Form 26
Slide 27: SBA Form 2484: Lender's Application Form
SBA Form 2484: Lender’s Application Form Updated 1/8/21 for 2021 Initial PPP Loans Differences from the June 24, 2020 version shown on subsequent slides SBA Form 2484: Lender’s Application Form 27
Slide 28: Borrower Info matches Form 2483
Borrower Info matches Form 2483 SBA Form 2484: Lender’s Application Form 28
Slide 29: No EIDL Advance
No EIDL Advance SBA Form 2484: Lender’s Application Form 29
Slide 30: SBA Form 2484: Lender's Application Form
SBA Form 2484: Lender’s Application Form 30
Slide 31: Franchise Section matches 2483
Franchise Section matches 2483 SBA Form 2484: Lender’s Application Form 31
Slide 32: Agent Fees
Agent Fees SBA Form 2484: Lender’s Application Form 32
Slide 33: Lender Certification
Lender Certification Sam.gov is where Lender’s register as a recipient of federal benefits 33
Slide 34: SBA Form 2483-SD: Second Draw Loans
SBA Form 2483-SD: Borrower’s Application Form Second Draw Loans Dated 1/8/21 Differences with initial PPP loan version (Form 2483) shown on subsequent slides SBA Form 2483-SD: Borrower’s Application Form Second Draw Loans 34
Slide 35: Loan Amounts
Loan Amounts Average monthly payroll is calculated the same as first draw loans using 2020 or 2019 except for new businesses. New business use the number of months in which payroll costs were incurred rather than only the period January 1, 2020 thru February 29, 2020. SBA Form 2483-SD: Borrower’s Ap
Slide 36: Reduction in Gross Receipts
Reduction in Gross Receipts For loans greater than $150,000 For loans of $150,000 and below • Borrower must provide • Borrower only must certify that the Applicant has met documentation to the lender the 25% gross receipts reduction at the time of substantiating the decline in application gross rece
Slide 37: Gross Receipts
Gross Receipts ▪ All revenue in whatever form received or accrued, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. ▪ Excludes net capital gains or losses. ▪ Does not include proceeds of Initial PPP Loan
Slide 38: Revenue Reduction Periods between 2020 and 2019
Revenue Reduction Periods between 2020 and 2019 Business Periods in 2019 2020 Quarter 2019 Reference Quarter All quarters in 2019 Any quarter; Matching quarter in 2020; Annually Annually 2nd , 3rd and 4th Quarters Any quarter; Matching quarter in 2020; Annually Annually 3rd and 4th Quarters Any quar
Slide 39: Alternative Annual Gross Receipts Reduction
Alternative Annual Gross Receipts Reduction ▪ Borrowers may compare annual gross receipts in 2020 with annual gross receipts in 2019 o Enter “Annual” in the 2020 Quarter and Reference Quarter fields o Submit copies of annual tax forms substantiating the annual gross receipts reduction. SBA Form 2483
Slide 40: EIDL Question Removed
EIDL Question Removed SBA Form 2483-SD: Borrower’s Application Form Second Draw Loans 40
Slide 41: EIDL Certification Removed
EIDL Certification Removed SBA Form 2483-SD: Borrower’s Application Form Second Draw Loans 41
Slide 42: New Initialed Certifications
New Initialed Certifications SBA Form 2483-SD: Borrower’s Application Form Second Draw Loans 42
Slide 43: New Initialed Certifications Continued
New Initialed Certifications Continued SBA Form 2483-SD: Borrower’s Application Form Second Draw Loans 43
Slide 44: SBA Form 2484-SD: Lender's Application Form Second Draw Loans
SBA Form 2484-SD: Lender’s Application Form Second Draw Loans Dated 1/8/21 Differences with initial PPP loan version (Form 2484) shown on subsequent slides SBA Form 2484-SD: Lender’s Application Form Second Draw Loans 44
Slide 45: Applicant Section includes matching reduction in Gross Receipts
Applicant Section includes matching reduction in Gross Receipts SBA Form 2484-SD: Lender’s Application Form Second Draw Loans 45
Slide 46: Loan Amount Calculation
Loan Amount Calculation Refinance of EIDL Loan omitted SBA Form 2484-SD: Lender’s Application Form Second Draw Loans 46
Slide 47: SBA Form 2484-SD: Lender's Application Form Second Draw Loans
SBA Form 2484-SD: Lender’s Application Form Second Draw Loans 47
Slide 48: SBA Form 2484-SD: Lender's Application Form Second Draw Loans
SBA Form 2484-SD: Lender’s Application Form Second Draw Loans 48
Slide 49: Loan Increase Process (SBA Procedural Notice 5000-20076)
Loan Increase Process (SBA Procedural Notice 5000-20076) ▪ Economic Aid Act allows for increases of 2020 Initial PPP Loans in certain cases (i.e., Section 312, 313 & 336): o Borrowers that returned or repaid some or all the initial loan o Partnerships – loan did not include partner compensation o Fa
Slide 50: Borrowers eligible for Re-application for Initial Loan in 2021
Borrowers eligible for Re-application for Initial Loan in 2021 ▪ Borrowers that repaid a First Draw Loan in full: o Received a First Draw Loan in 2020 o Lender reported to SBA before 12/27/20 that Borrower fully repaid the loan (i.e., 1502 Report) o SBA has not remitted a forgiveness payment on that
Slide 51: Other Borrowers eligible for Loan Increase
Other Borrowers eligible for Loan Increase ▪ Borrowers that returned or repaid part of a First Draw Loan: o Received a First Draw Loan in 2020 o Lender reported to SBA before 12/27/20 that Borrower repaid the loan in part (i.e., 1502 Report) o SBA has not remitted a forgiveness payment on that loan
Slide 52: Other Borrowers eligible for Loan Increase
Other Borrowers eligible for Loan Increase Continued ▪ Borrowers that did not accept the full amount of a First Draw Loan: o Received a First Draw Loan in 2020 but did not accept the full amount o Lender reported the loan as partially disbursed and did not process a decrease in E-Tran o SBA has not
Slide 53: Other Borrowers eligible for Loan Increase (or Re-application)
Other Borrowers eligible for Loan Increase (or Re-application) ▪ Borrowers that did not accept the full amount of a First Draw Loan: o Received a First Draw Loan in 2020 but did not accept the full amount o Lender reported the loan as partially disbursed and did process a decrease in E- Tran o SBA h
Slide 54: Q&A
Please use chat to submit your question. Q&A 54
Slide 55: Additional Resources TSoftPlus
Additional Resources TSoftPlus™ Wolters Kluwer PPP Solutions: ▪ Fast track your TSoftPlus implementation and go to www.wolterskluwer.com/en/solutions/tsoftplus/sba-tsoftplus ▪ To Get Started o Contact your Wolters Kluwer sales representative o Or Email: complianceoneinterface@wolterskluwer.com ▪ For
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