DISCLAIMER: information below is NOT legal advice – it is for informational purposes only so that you can be more knowledgeable when discussing with your own accountant and lawyers your own particular situation
Please note that Agudath Israel is not a law firm and does not dispense legal advice. Please reach out to your own attorney for official legal guidance.
Special Thank You to Rabbi Eliyahu Stern for all the time and effort he has given to gathering and researching the information below.
TABLE OF CONTENTS:
17.0 – the confusions of applying for the PPP loan
Here is an excellent article from Forbes summarizing the 3 frustrations and confusions that everyone including lenders are having right now and awaiting SBA guidance. I think it addresses most of the questions that I have been seeing from everyone. I suspect we will get answers at some point. I am attaching a pdf format as well as the link below. To summarize the three issues are:
- 1099 employees- included or not
- Excess of $100k salaries- exclude the entire employee or not
- Including Federal taxes- what is and isn’t included for which time period
Great news! The SBA released a formal FAQ for faith based organizations. You can find them attached or here https://files.constantcontact.com/00a8b634701/5315e1dd-8783-4168-aa19-5af6052de383.pdf.
Take note of the last sentence of question 2 which seems to be pretty clear that parsonage payments will qualify. Additionally, it is clear that EIDL loans may be used by religious institutions as well.
Shuls, Kollelim etc. clearly qualify. Make sure your bank is aware of this if they give you any pushback.
I am collecting some tools that EDN’ers put together to help the oilam prepare their packets for the bank. If you have something that can help others, please either share with everyone or send it to me to share.
Attached is a sample ledger that a mosad who does not have a sophisticated accounting system and has parsonage sent to their bank. It is a start. The bank will most likely come back and ask for more info. I am a sharing to help those who are stuck.
I am pasting the language below that discusses the 75% rule. I believe I made a mistake before on the webinar when I indicated that the ENTIRE loan would not be forgiven if you used more than the 75%. It seems like part of the loan will indeed be forgiven. The maximum amount they will forgive is 75% used towards payroll and 25% used towards other expenses. Thank you R’ Avrohom Pressman for pointing that out.
To illustrate: Someone borrows $100,000 & spends $60,000 on payroll (75% of $80,000)
he would have to repay $20,000, & $80,000 would be forgiven (of which 75% was spent on payroll)
While the Act provides that borrowers are eligible for forgiveness in an amount equal to the sum of payroll costs and any payments of mortgage interest, rent, and utilities, the Administrator has determined that the non-payroll portion of the forgivable loan amount should be limited to effectuate the core purpose of the statute and ensure finite program resources are devoted primarily to payroll. The Administrator has determined in consultation with the Secretary that 75 percent is an appropriate percentage in light of the Act’s overarching focus on keeping workers paid and employed.
15.0- New Application and Webinar recording
All, attached is new application released today. Also, below is a link to the second half of the webinar including the SBA broker and Mr. Tawil. Due to technical issues I do not have a link to the first half hour or so.
As Yitzchok explained on the webinar the banks are not really ready yet nut by Mon-Tue he would assume they are. Also, he was not concerned with funds running low within the first two weeks since the banks are not ready yet to lend.
We will iy”h be having a webinar tomorrow at 12:30 geared for mosdos. We will be reviewing the main Q and A that the oilam has been asking as well as providing a general overview of how different types of mosdos should be approaching the conglomerate of information.
You can forward the invite to anyone you think may benefit. Here is how to register:
When: Apr 3, 2020 12:30 PM Eastern Time (US and Canada)
Topic: EDN CARES Webinar
Register in advance for this webinar:
After registering, you will receive a confirmation email containing information about joining the webinar.
14.0- PPP loans Final Regulations Released!
These were just released.
More information will start coming from your banks now that this is finalized but here are some answers to questions that have been asked that I pulled from the document (interest is 1% not .05%):
- For borrowers that do not have any such documentation (payroll records), the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount.
- You are ineligible for a PPP loan if you are a household employer (individuals who employ household employees such as nannies or housekeepers)
- How do I calculate the maximum amount I can borrow?
- The following methodology, which is one of the methodologies contained in the Act, will be most useful for many applicants.
- Step 1: Aggregate payroll costs (defined in detail below in f.) from the last twelve months for employees whose principal place of residence is the United States.
- Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year.
- Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12).
- Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.
- Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).
- The following methodology, which is one of the methodologies contained in the Act, will be most useful for many applicants.
- The examples below illustrate this methodology.
- Example 1 – No employees make more than $100,000 Annual payroll: $120,000 Average monthly payroll: $10,000 Multiply by 2.5 = $25,000 Maximum loan amount is $25,000
- Example 2 – Some employees make more than $100,000 Annual payroll: $1,500,000 Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000 Average monthly qualifying payroll: $100,000 Multiply by 2.5 = $250,000 Maximim loan amount is $250,000
- Example 3 – No employees make more than $100,000, outstanding EIDL loan of $10,000. Annual payroll: $120,000 Average monthly payroll: $10,000 Multiply by 2.5 = $25,000 Add EIDL loan of $10,000 = $35,000 Maximum loan amount is $35,000 10
- Example 4 – Some employees make more than $100,000, outstanding EIDL loan of $10,000 Annual payroll: $1,500,000 Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000 Average monthly qualifying payroll: $100,000 Multiply by 2.5 = $250,000 Add EIDL loan of $10,000 = $260,000 Maximum loan amount is $260,000
- What qualifies as “payroll costs?” Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.
- The Act expressly excludes the following: Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and income taxes required to be withheld from employees;
- When will I have to begin paying principal and interest on my PPP loan? You will not have to make any payments for six months following the date of disbursement of the loan. However, interest will continue to accrue on PPP loans during this six-month deferment. Payments will not be made for a six-month deferment period
- How can PPP loans be used? The proceeds of a PPP loan are to be used for:
- payroll costs
- costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
- mortgage interest payments (but not mortgage prepayments or principal payments);
- rent payments;
- utility payments;
- interest payments on any other debt obligations that were incurred before February 15, 2020;
- 75 percent must be spent on payroll costs
- not more than 25 percent of the forgiven amount may be for non-payroll costs
- What happens if PPP loan funds are misused? If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud.
13.0 – PPP Loans (more info)
The details of the loans are seeping out. I am attaching a beautiful summary with great links ion this. Thank you R’ Shlomo Soroka from Agudah Illinois for sharing this.
You will note a few things:
- Items 5,6 and 7 are not relevant if you take the PPP loan (don’t read themJ)
- You are allowed to take both the EIDL and the PPP for different uses- this means that you can take the $10k advance and use it for bills that won’t fall under the PPP. However, there is a clause on an EIDL guidance sheet (not listed here) regarding religion there that the Agudah is seeking legal counsel to confirm that mosdos can take the funds and use it for non–religious purposes.
- The language of the guidance seems to indicate that parsonage and QTR and possibly even fellowships can be included in compensation for the PPP loans. Banks don’t seem to know more than what the guidance says as of now.
- HOWEVER, the bank forms that are coming out do not have any allowance for these types of compensation. The backup required for forgiveness, as well as what is required up front, seem to be focused exclusively on payroll reports. We are therefore trying to find banks that will be able to work with the uniqueness of mosdos. I am aware of three banks who want to do this but haven’t yet figured out if they are able to. If I hear something (or if any of you hear something) I will circulate. I would not trust brokers at this point who tell you they can get it done unless they can back that up.
- Another very important point to keep in mind- the sba says on their website they will require that 75% of the loan be used for payroll in order for the loan to be forgiven. If you send employees to unemployment you may not hit that threshold. If you have a high mortgage and lower payroll you also may not hit it.
- Lastly- they are clear that these loans have a cap and therefore you should not wait to apply. Applying does seem to be fairly simple at this point.
We will be rescheduling the webinar for tomorrow morning. Another email will be sent with that information.
12.0 – PPP Loans UPDATES
A few small updates:
- BANKS DO NOT YET HAVE ANSWERS- RELAX you won’t miss it by waiting a few days for the PPP loan. They expect to have the answers by Friday. They also don’t know how long the process is etc.
- Many brokers are reaching out to try and get business. The sample application is extremely simple to fill out (btw- federation is telling people to write “None- 501c3 charity” in the box that ask who the owners are). The complicated part is pulling your internal reports together. Your QuickBooks and payroll person should be able to help with that. If a broker asks you for the business, you won’t lose by giving it to him because he is not allowed to charge you. However, you may want to confirm that he will work through your QuickBooks and pull your reports together for you before you sign up with him.
- Kollelim and the like who pay fellowship and scholarship may or may not be eligible for the PPP. It remains to be seen.
- If you are eligible for PPP and you have not yet filed for EIDL $10k- don’t file (it seems pretty clear at this point that you won’t be able to do both)
- If you did file for EIDL $10k- you will ultimately rescind that and file for PPP. You bank or the SBA should be able to direct you how to do that when you hear from them.
- Make sure to keep proper records of everything going forward as very often they will do audits on this, in a year or two when things calm down.
- I just heard from one bank that the application is changing…. Wait until Friday and you will be best off. Do your Pesach cleaning/kashering now instead of thenJ
11.0 – PPP Loans
I know many of you have spoken to your banks about the PPP loans and for good reason. I would like to explain this as it has been explained to me.
The chain of command in the United States looks like this:
- Congress/President pass the laws and assign a body to implement
- The US Treasury oversees the financial matters of the country and need to approve and provide details on the structure of the laws based on what Congress passed
- Under them is the various different banking departments. One of these is the SBA.
Congress sets basic guidelines. Next the Treasury sets their rules. Finally the SBA decides how they want to implement.
What has happened so far is that Congress and the US Treasury have issued guidance on the PPP loans. However, the SBA has not yet issued their full guidelines. Therefore, banks know pieces of it but they are missing the rest of it. That is why the application has been released but the implementation has not. Until that is, there is speculation as to how this will go but it is not yet up to the point where it is defined enough to get answers. The answers will be coming soon.
Here is updated link to the application: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
FYI- Banks are receiving 5% origination fees from the feds for every loan they process under $350k, 3% for loans from $350k- $2mil. Additionally brokers make deals with the banks and they get a commission from the bank which comes from the banks fees. Anyone who tells you they will fill it out for you and take a percent from YOU, should be explored further.
You should not be paying anyone to do this for you unless you can’t figure out how to do it yourself or are missing staff. In that case, hire someone by the hour or make sure the broker who wants your business is not charging you. Everyone is making money and is trying to get to the front of the line in getting your attention. Sit tight for a few days until all details are at the bank level, start a conversation with your bank but keep your eyes open.
10.0 – Some more info from the SBA – $10k Grant
The SBA has released two message so far:
- We know everyone is waiting and everything you heard may be good educated guesses but we do not yet have all your answers. They will hopefully be short in coming. Banks expect to have the info by the end of the week. Here is the link to page that will be updated as they post https://www.sba.gov/funding-programs/loans/paycheck-protection-program.
- Everyone including shuls, kollelim etc. may apply for a $10k grant based on a good faith statement that you were affected by the virus. The SBA created a new application system and even if you already applied you need to fill this out here SBA.gov/Disaster. This is a free $10k grant. It seems pretty clear that it will not affect your application for the Payroll Protection Program.
- They tell you it will take 2 hours ten minutes to fill it out but you can do it in 20-30 minutes or so if you know your numbers.
- They are set to respond within 3 days from when you fill it out and it seems like they adjusted their website so it is not as slow.
- These funds can be used for any bills you may have that you are struggling to pay as a result of COVID19.
- The SBA has posted the Paycheck Protection Program on their website with some details but have added the word “eligible non-profits” which needs guidance (click here for their description). Here are the guidelines that they posted so far:
- Eligible recipients may qualify for a loan up to $10 million determined by 8 weeks of prior average payroll plus an additional 25% of that amount.
- Loan payments will be deferred for six months.
- If you maintain your workforce, SBA will forgive the portion of the loan proceeds that are used to cover the first 8 weeks of payroll and certain other expenses following loan origination.
Finally, the webinar that we are doing tomorrow is not going to explain details of the sba loan (unless we get details before then but it does not seem like we will). The goal of the webinar is to help you process this overload of information and understand how to move forward in the most productive way.
P.S. here is the page that has the most recent updates for NJ Grants- Thank you Avi Schnall! https://faq.business.nj.gov/en/collections/2198378-information-for-nj-businesses-on-the-coronavirus-outbreak
Hope this helps and stay safe!
ADDITIONAL INFO FOR SBA LOAN:
The one thing I want to add to what R’ Eliyahu said below is that in the meantime, people could start to gather their documents. I received the following list from my banker re: the SBA PPP Loan.
This is not all inclusive, likely to change & hopefully will be shorter.
- SBA form 1919
- Payroll records for employees from 3/01/2019 to 2/29/2020
- Form 941s and verification of payment of 940/941 taxes that match payroll records
- Evidence of any contract employee payments from 3/01/2019 to 2/29/2020
- Copy of 1099’s to verify contract employee payments
- Most recent mortgage statement &/or rent statement
- Most recent utility bills
- Organization documents
- YTD financials & prior year tax returns
- Personal returns & financials (typically an SBA requirement, but might be lifted since no personal guarantees, so stay tuned)
For now, clients should speak with their attorney if they question whether or not they qualify. Until you hear differently, we cannot make that determination.
9.0 – POSTPONED: EDN Webinar and Update
As we are getting more information regarding the sba loan, it seems like banks are receiving the US Chamber of Commerce guidelines that we sent out yesterday. I am attaching another copy for those who may have missed it or you can view it here. Review it carefully with your bookkeeper/cpa/tax advisor.
What mosdos are finding is that the larger your mosad/payroll is the less likely it is that you will be able to spend the full loan in the 8 weeks. Therefore, it makes no sense for the mosad to send employees to unemployment. Mosdos with smaller payrolls and larger mortgages will be more likely to over spend the loan.
The questions that people are asking which we do NOT have answers to yet:
- Is parsonage included?
- What about QTR?- seems like not
- What about Kollel fellowships? (it is assumed not but maybe)
- Is the loan only to be used for expenses INCURRED during those 8 weeks or PAID during the 8 weeks? This has a list of ramifications:
- If I am behind on payroll and I catch up during the 8 weeks how is that treated?
- Can I prepay the next payroll?
- Can I make extra insurance payments? Extra mortgage payments?
We will iy”h be having a zoom webinar tomorrow with Isaac Tawil and a couple ED’s who will walk through how they processed the laws and figured out what to do next. If the sba issues guidance before then we will try to have a banker join us as well. Look out for another email with the details and the link for this call. It is open to anyone but it is geared for mosdos. Feel free to send it to your ballei batim to join as well.
You are invited to a Zoom webinar focused on helping mosdos process all the information that is out there in a practical way.
When: Mar 31, 2020 02:30 PM Eastern Time (US and Canada)
Topic: EDN CARES Act Webinar
Please click the link below to join the webinar:
Or iPhone one-tap :
US: +13126266799,,527048454# or +16465588656,,527048454#
Dial(for higher quality, dial a number based on your current location):
US: +1 312 626 6799 or +1 646 558 8656 or +1 346 248 7799 or +1 669 900 9128 or +1 253 215 8782 or +1 301 715 8592
Webinar ID: 527 048 454
Here are two resources for NJ and NY specifically. Please keep checking your state for updates as many states are offering grants or other programs to help small businesses and non-profits in their states.
- NJ website where updates are set to come regarding State Grants for Employers- https://www.nj.gov/labor/employer-services/business/covid.shtml
- Some grants in NY city area https://www1.nyc.gov/site/sbs/businesses/covid19-business-outreach.page
UPDATE ON EDN WEBINAR:
Many people reached out about the webinar so I want to explain what we will discuss and won’t we won’t discuss.
- The purpose of the webinar is NOT to explain details of the PPP loan (Payroll Protection Program)- we don’t have them yet. there is info coming out slowly but until it is real and solid I am going to hold off on broadcasting it. Also, your bank is going to be the best address to get your answers. They are issuing the loans.
- The purpose of the webinar is to demonstrate how the CARES act will benefit different mosdos. Large Schools, small shuls, kollelim and mesivtas may have different programs that they can take advantage of. We will go through a few scenarios of different type of mosdos and their best strategy moving forward.
- The mission of the webinar is to help you cut through the information overload and figure out what your mosad should focus on. Many mosdos have figured this out already and they will not learn much from the webinar.
- The webinar is open to all and the link can be forwarded. Here is the link and call in: https://zoom.us/j/527048454?pwd=UXB5ZnQxZFJheHhZSGtiaUh2blZzdz09 13126266799,,527048454# or +16465588656,,527048454#
- Some of the crowdfunding campaign websites are offering free services ltovas hatzibur due to the matzav so if you are considering a campaign you should contact them. Here is one //cmatch.me/fightcorona. I understand that others are doing it also.
8.0 and 8.1 – Leveraging multiple benefits (with clarification)
As you plan for your April 1st payroll…. Some more clarification has been forthcoming and I assume more will still come but here are a few good points. I put this in PowerPoint form as well which is attached.
Sick and family leave:
- If you closed already but kept essential employees like maintenance staff on, they will be eligible beginning April 1st for 100% the first two weeks of sick leave if they “say” they are not feeling well and you continue to have work for them. You will get this reimbursed.
- If you look at question 24-26 on the Q and A page of the Dept of labor, you will see that the only way this benefit is relevant is if you continue to have work for the employee and he can’t work because he is sick or watching children. Make sure to discuss this with your accountant in detail before making a decision.
BTW- I suspect many groceries etc will be losing employees for two week beginning April 1st because of this law which will essentially slow down whatever is still operatingL
Each state will be making modifications to their unemployment guidelines so it is critical to stay on top of that. It seems like you may be best off sending employees who are not working at all to unemployment BUT there is a very complex formula for the sba loan forgiveness that will get affected by this. See below and attached.
The US Chamber of Commerce released this excellent guide. It needs to be read carefully. It is the most authoritative piece that I have seen. The Federation sent out the attached graph on this also. Here is the key point to keep in mind. To be eligible for loan forgiveness you need to maintain the same staff as before OR if you didn’t and laid people off, THEY NEED TO BE REHIRED BY JUNE 30TH!
Allow me to illustrate how all of this might be able to work for you:
Category 1- Employees who have zero work now due to school closure- send them to unemployment and they will receive an extra $600 per week above your states allowance from the federal government. Rehire them before June 30th.
Category 2- Employees who have some work- continue paying them at the full rate (you may be able to reduce their pay because they are not working full time and then they can collect partial unemployment PLUS they will get the extra $600 from the government- this will vary by state– Thank you Aharon Rubenstein for sharing this tip.)
Category 3- Employees who have full amount of work- they should continue working and getting paid. If they claim they can’t because they are sick or caring for sick person/child they will be eligible for the sick leave/family leave credit
You apply for an sba loan which will equal 2.5 x your average monthly payroll of the past year. You then need to spend those funds in the next 8 weeks on eligible expenses. You get the loan forgiven MINUS the sick leave/family leave funds AND minus the reduction in your payroll assuming you still spent it on eligible expenses. However, this is only true if you rehire any employee that was laid off before June 30th otherwise you aren’t eligible for the forgiveness.
Once again– Every mosad must talk to their accountant/tax advisor before making a decision. I am none of the above and I am only trying to send out what comes my way. Regardless, this is going to be a tedious process for each bookkeeper to work through.
Many of you have asked if we can just hire one person to do it for all mosdos. Realistically, it will not be humanly possible for one person to process all of this for everyone in the amount of time we want it done. There is a bank with a frum owner and staff who are trying to see if they can get a mainstream process set up for mosdos. Will keep you posted if/when that evolves.
PS– the employee retention credit (SSI Credit) which gives you 50% credit is not available to anyone who takes the sba loan which is why I haven’t been talking about it here.
One important piece I failed to mention regarding unemployment. If you are on a self-pay plan the federal government will split it 50/50 with you but…
- I don’t know if they are giving the extra $600 from their pockets or also splitting with you.
- I assume the 50% you pay is not an eligible expense for the sba loan (simply because logic would dictate that but maybe it is)
This further complicates how you will figure out your next steps. The good news is as you talk through this more and more you will be clear on the best route for your mosad.
You definitely should be applying for the sba loan based on what we know so far.
The only questions that you may have is regarding unemployment and you need to get more info from your state. A labor attorney who specializes in your state will be able to guide you once the states figure out what they are offering. NY and NJ have not yet figured this out as of this morning.
I am attaching another summary of all the laws for those who want more clarity. Thank you R’ Avi Cohen for sharing and highlighting. This was published on The National Law Review and sent out by Roth and Co.
- It would seem that we need to be especially conscious of the eight weeks given to use the loan money. For example, if you pay the April 1st payroll this week and then get the SBA loan on April 2nd or 3rd, the eight weeks would be up on May 27th or 28th. This would only give you one payroll (May 1st) with which to use up the loan money that you hope to have forgiven. If you are getting a loan of 250% of monthly payroll this would seem to be a crucial point to be aware of (unless you have enough other eligible expenses).
- I noticed that in highlights and notes to the article published in the National Law Review (thank you to whoever did that!) it states that it’s unclear if parsonage can be included in the payroll calculations.
I’m certainly no lawyer, but I’m wondering if at this point it’s safe to assume that parsonage can be included. The language that is being used is “salary, wages, or similar compensation”, which would seem to include parsonage…
- It would seem that you are correct but I don’t know if they will focus on the work days for that period or the actual pay dates
- Three accountants told me that they believe parsonage is included (R Avi Cohen from Chai Lifeline made those highlights). Talk to yours but ultimately your bank will be the deciding factor.
I am going to add that the first payment on the loan can get deferred up to a year. This will give you plenty of time to figure out how much money you needed, how much will be forgiven and then you can pay back the entire remainder or keep the rest. When you start doing the math you will realize that you will probably not get the full loan forgiven because you won’t be able to fully spend it on eligible expenses.
The federation has been doing webinars on this that have been very good. They have another one coming up. They are worth listening to. Here is a link for one they are doing today at 4:30.
7.0 – Why the Sick Leave/Family credit is not relevant for almost all mosdos
It seems pretty clear at this point that the sick leave/Family leave will not be relevant for most mosdos. Read the highlighted question below from the US Dept of Labor’s website. I am including some links that are really the source of the information and are the most accurate info in this field. The Dept of Labor is pretty updated and these links were updated today.
- Link to Dept of labor guidance for employers on the sick and family leave- It is clear that it is only for employees who can’t work because they are sick or caring for sick/child. https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave
- Link to Dept of Labor sign that gives an easy overview of the sick and family leave requirements https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
- Link to Dept of Labor Q and A on this law- THIS IS THE MOST INFORMATIVE- https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
Question 23 on that page: If my employer closed my worksite before April 1, 2020 (the effective date of the FFCRA), can I still get paid sick leave or expanded family and medical leave?
No. If, prior to the FFCRA’s effective date, your employer sent you home and stops paying you because it does not have work for you to do, you will not get paid sick leave or expanded family and medical leave but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it is required to close pursuant to a Federal, State, or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
This leaves us exploring the 50% tax credit, sba loans and unemployment options. Unemployment has been pushed to the state level and details will therefore vary by state. However, we are waiting for the sba guidelines so we can understand if we can get the loans and get them forgiven. If we can’t we will want to send employees to unemployment. If we can get the loans and get them forgiven then we will not want to send our employees to unemployment (some may still go or be sent depending on if they can work remotely and if it will jeopardize our loan forgiveness). The states have not yet determined how they are expanding their unemployment guidelines but they are in the process of figuring that out. Stay tunes for more info on both of these.
Stay tuned and safe!
6.1 – The Bill passes the house
As you may have heard the bill has passed the House!
Mr. Tawil prepared a handout along with a 53 minute presentation that gives an overview of the bill. He did it for his clients and has given me permission to post. It is very clear and includes all the pieces you need to know. Although it is not directed to mosdos specifically but there are numerous parts that you personally and your mosad will benefit from.
Attached is his handout and you can call 425-436-6309 ACCESS CODE 854018# for a playback of the recording.
Additionally, I have heard from an SBA professional who said that by Monday he expects to have details on the loans available for us but the basics so far seem to match. Let’s hope and daven for this and MUCH MUCH MORE.
Hatzlacha and wishing everyone a safe and healthy Shabbos.
6.0 – Unemployment vs. SBA loan
Ah gutten Erev Shabbos,
I hope everyone is safe and managing to maintain some normalcy. I preface this email that if you are the type that says “just tell me what to do” STOP- do not read further! Take a coffee, relax and wait a week before asking that question. If you are trying to learn the sugya so that you can educate your ballei batim and get temporary loans from them until this settles then these details are for you. After all April 1st payroll is 5 days away.
These laws have not yet passed so this is still premature but many people have been asking about sending their employees to unemployment. This decision should ideally be made before 4/1 but is not tragic if it isn’t. However, here is the way I understand it as of this moment:
- $25million has been allocated to the Dept of Labor to hire staff to ensure compliance with all the new funds that are available. If each staff member is paid $50,000 that is 500 new compliance officers hired for a year. Therefore before sending employees to file unemployment beware:
- The Dept of Labor will want verification that the employee was not doing remote learning/teaching since throughout the country all schools are doing remote learning. Keep in mind public schools are NOT sending their teachers to unemployment. The definition of unemployment is that the staff member was let go and they have no job.
- If you send some employees and not others be aware that there is potential discrimination which will be scrutinized.
- Finally, if the SBA loan is how they are saying it will be, the typical mosad including shuls, kollelim, chesed organizations would be much better off with the loan.
Here are the loan details as dictated by the CARES act. Congress is in the process of approving it which will then GIVE THE SBA the authority to administer it. The SBA might still require things that congress did not and we need to wait to confirm that. As of now:
- Loan may be used for payroll, health benefits, insurance, employee compensation, interest on debt including your mortgage, rent and utilities
- Max loan amount will be 2.5 times the average payroll of the past 12 months (even though it can be used for other things)
- No guarantees or collateral required
- For the loan to be forgiven in its entirety you must keep the same amount of employees and not reduce people’s salaries in excess of 25% (simplifying here for mosdos). Additionally you MUST MUST MUST document that you spent the funds from April 1st– May 27th (the 8 week period) on the approved items. (you also need to prove that these expenses were in place from February so don’t go hire new staff and the max payroll counted per employee is $100,000 annually) You must have great records for this!
- Application process will need the following:
- You must make a good faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19; that funds will be used for a permitted purpose; and that you are not receiving fund from another SBA program for the same uses.
- documentation verifying the number of full-time equivalent employees on payroll and pay rates, including payroll tax filings
- state income, payroll, and unemployment insurance filings
- documentation verifying payments on mortgage obligations, lease obligations and utilities, including cancelled checks, payment receipts, and transcripts of accounts.
To Illustrate: My school has a monthly payroll of $300,000. Besides that I pay tuition checks etc. The SBA gives me a loan of 2.5 x 300k= $750k. I use these funds to pay two months of payroll and I have another $150k available to pay the interest portion of my mortgage, utilities, tuition checks and my insurance bill. Since I am a mosad, I did not lay anyone off and maintained my payroll (it even went up a little from last year) AND I prove that I spent the funds on the approved items, the sba now forgives the entire loan.
If this is true, it overshadows all options for mosdos. We need to wait for the law to pass and then for the SBA to actually give the banks guidance on these loans to confirm that there are no more details that throw us off. For now you need to sit tight. However, you should be able to use this information to educate ballei batim who can lend you funds until this all falls into place. They are claiming it will go quick but you need to plan for this to take until the end of April to actualize.
Hopefully this will be continue to get clearer in the upcoming days.
Wishing everyone a Good Shabbos and yeshuas Hashem kheref ayin!
Thanks for all your hard work and updates. Keep them coming…
When you say payroll is that including the parsonage?
It isn’t clear yet. The accountants are saying the parsonage would be included in the formula calculating the amount of the loan. Regardless it is definitely included in what you are allowed to spend the funds on
Thank you for the invaluable information that you are providing to all the mosdos across America. I can only imagine how much time this is demanding of you.
Do you recommend starting the online SBA application process, not just prepping the paper work but actually submitting documentation via the online portal or should we wait to submit the documentation till the law is finalized?
Guten erev Shabes,
I can’t tell you for sure. They seem to be saying to go to the banks.
Thank you for all your efforts and information!
Will you have to prove the loss of income due to the virus to get approved for the loan?
Lets say my tuition income goes down 40% but the $ amount is less than 250% of my monthly payroll will I only be approved for the smaller amount?
Whats to stop a small business that has no loss of income from getting a free handout of 250% of payroll?
It says you need a good faith statement but not more. The SBA may change that though. They expect to have more info by Monday.
5.0 and 5.1- Major News! with 5.1- CORRECTION and updates
5.1- CORRECTION and updates (original 5.0 post below)
Here are some more updates and a CORRECTION:
- CORRECTION- the emergency sick and family leave does NOT go retroactively. The bill said it was able to and the Department of Labor had the right to redefine it which they did. They said it starts from April 1st. This means that until April 1st your employees will use up their PTO to get paid or you will be going above and beyond when you pay them anyway or they just won’t get paid. See attached poster that was just released by the US DOL which must be circulated to your employees.
- Your payroll company will probably be sending you some of the laws of what you need to do for your employees- Keep in mind they are being fed information by the Dept of Labor who is out to enforce the employees’ rights. They will not be telling you where you can get the funds from. However, their information is reliable.
- There are 800 approved local banks across the country who can give the SBA loans- check with yours
- Your bank may tell you that religious or non-profits are not eligible- hang in there, they don’t have the regulations yet. Here is the application– look at page three where it includes all of usJ. Thank you to Yaacov Cohen for sending this over from the OU.
- Ultimately you will end up choosing between the payroll tax credit and the SBA loan. At this point it seems like mosdos will want to go to the SBA loan but we await more clarity. Don’t get confused between two things: What the Government is REQUIRING you to pay your employees (if you keep them) which is what it says on the attached poster AND how YOU can get money from the Gov.
As I mentioned yesterday there will be two upcoming calls on this. One is today at 3:30 with the Agudah and Roth and Co. (email sent out yesterday from Shai) and another one will be with Mr. Tawil (stay tuned for details).
add email with additional info on FFCRA
Original Post of 5.0
Ah gutten Chodesh,
As you may have heard the stimulus act passed the Senate 96-0 last night and is expected to get finalized very soon. There are some major changes with this act that will change the options for mosdos. Stay tuned for details but some important points:
- Adjustments were made to the bill that was already passed regarding the payroll tax credit (this will create some confusion)
- A loan forgiveness program that may be the best option out there for mosdos was included
- They are directing the crowd to local banks to get SBA loans and NOT to the government website. Talk to your banker to see if he is an eligible SBA lender. Get in line because he will be swamped.
- Here are some highlights about the loan option but honestly you might be better off waiting until Sunday when many people have had a chance to read through the 883 pages of the bill!
- Thank you to R’ Yaacov Cohen for sharing some of this info:
- SBA 7(a) Loans- Paycheck Protection Program: If the nonprofit or small business uses this loan to pay wages, the loan will be FORGIVEN. Loan max is $10 million or 250% of your monthly payroll and the loan period is February 15 – June 30, 2020 but you can defer paying the loan regardless for 6-12 months
- Loans immediately available through approximately 800 existing SBA approved lenders
- Loans can be used for payroll and payroll support, such as paid sick or medical leave, employee salaries, mortgage payments, and any other debt obligations.
- Information and applications will be posted on disasterloan.sba.gov (guidance has not yet been delivered by the federal government, but will be available shortly). Sec’y of the Treasury has committed to having an “easy, same day application and disbursement process in place by the end of next week.
As I get more information I will continue to share iy”h.
4.0 – How you can pay Rebbeim/Teachers/Staff through this crisis!
- Hutman and Hutman has told me that they believe Parsonage payments should be able to be included in this tax credit BUT this is not yet verified
- The IRS says they are producing a mainstream process where they will front the funds and be available from two weeks after you file for it.
- Rumor has it that the feds are giving SBA loans to places who continue to pay their workers and then they will forgive the loan if the business/org keeps their end of the deal- stay tuned for details
- I attached an updated version of my last presentation. All updates are in red text.
There will be two webinars/conference calls in the next few days on this. One which R’ Shai Markowitz from Agudah has arranged together with Roth and Co and another one with Isaac Tawil. Both will probably be very informative. Look out for emails regarding these.
Stay safe! Yeshuas Hashem Kheref Ayin!
3.0 – How you can pay Rebbeim/Teachers/Staff through this crisis!
Here is today’s update so far:
- Great news- the bill takes effect on 4/2/2020 but goes retroactively!
- Here is a link to a full summary of all the different ways for employees to get paid which was put together by the LRRC which you may find helpful. It was written for employees not employers.
- Did you apply for your sba loan yet? Why not? Here is the link: https://disasterloan.sba.gov/ela/ – early morning (2-8 am) is the best time because the website is slow at almost any other time. It is not a terribly complicated process but it is also not fast. You need to first register and then apply. Registering is fairly quick. You will need your accountant/QB expert/Controller’s help for some of the information.
- Congress has a variety of things on the table but they can’t seem to get on the same page to approve anything yet- at some point something will give
- There has not been any clarification yet regarding how to apply for the payroll credit or cash advance nor regarding how Rebbeim and teachers who do not have children (that they are watching) will be treated. Stay tuned.
2.0 – How you can pay Rebbeim/Teachers/Staff through this crisis!
Sorry for the excessive emails. Trying to share whatever information is coming my way to help us all make it through while continuing to pay our staff. (For those who are looking to avoid paying staff there are exemptions out there not being shared.)
- The IRS is set to release a form later this week that can be used to request a CASH ADVANCE from the government for the funds that you are eligible for which are in excess of your payroll tax credit!
- Seriously consider applying for an SBA loan Here are some key points:
- Non-profit interest rates are 2.75
- Max loan amount is for $2mil for 30 years
- Loans may be used for fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact
- Terms are determined case by case and will be up to the loan officer assigned to the case
- Regarding how to file, it is relatively simple. It is an online process which is jammed up due too extremely high volume (fill it out at night). Besides for the basic info, they will also need copies of the most recent tax return and transcripts and possibly an interim financial statement.
- Consider sending “non-essential” staff to file for unemployment- see attached document- Thank you Rabbi Bentzy Magid and Isaac Tawil for your input with this.
P.S. There are some updates on what I sent out yesterday but there is still more clarification needed. In an effort to spare everyone the back and forth I am going to hold off sharing until the IRS form comes out. These points need further clarification:
- If a staff member does not have kids at home he may not be eligible for any of this if school was closed down due to the COVID19- the language is contradictory…
- What happens prior to 4/2/2020?
- During the first two weeks you may only be eligible for 2/3 of the salary- contradictory language again
1.0 – Payroll tax relief for paying employees with UPDATES
As we are all trying to cope with the new realities and the speed they are coming at us, this is a silver lining that the Rbs”o is sending our way. Nobody has all the details figured out because it is new but make sure you get to the bottom of this in the coming days as it may be a partial solution for helping us pay payroll.
The email below is from a knowledgeable accountant that outlines basics of how you will recoup what you pay employees during this period. The details are still evolving but the basic idea is outlined well. You may be able to use this to get loans from your key ballei batim if need be. Talk to your accountant and your ballei batim.
May the Rbs”o protect us all.
Dear fellow community members,
The financial effects of the Coronavirus have been detrimental to many in our community. Earlier today my office sent out an email detailing the stimulus package passed by Congress this week. Although not all details are clear one aspect of the bill is a paid sick leave. The way this will work is as follows (this is purely based on my current understanding as all the details have not been hammered out):
The company must continue to pay the employee for 2 weeks at their full salary.
If necessary they will continue to pay the employee for up to 10 more weeks at 2/3 of their salary.
Within the next 3 to 6 months the company will be reimbursed in full in the form of a payroll tax credit.
Those who are ill, quarantined, or caring for an ill family member are eligible for 2 weeks of paid leave. Those who need to care for their children due to school closures will be eligible for up to twelve weeks.
This will naturally help so many in our community who are in desperate need of these necessary funds. It will also help the companies to retain a solid workforce without losing so much money. Any employee of a company with fewer than 500 employees is eligible.
Unfortunately, however, it has come to my attention that many companies intend to take advantage of a loophole whereby companies with fewer than 50 employees could request an exemption if they are able to show that it will cause a financial hardship. Sadly, many companies currently don’t have the funds to pay their employees even if they know they will be reimbursed in just a few short months. Many companies have asked me if they should just fire their workers so they could at least collect unemployment.
We, as a community, cannot stand by and allow so many people to suffer. I am begging all those with the financial wherewithal to arrange a short-term Gemach loan to lend the funds to companies in need so they could offer the paid sick leave to their employees. The Gemach could be arranged so that the loans get paid back as the companies get their payroll tax credits in a few months. This will enable so many struggling families to have some semblance of normalcy over the next few weeks while equally helping businesses to remain viable by retaining their employees.
Please note that all of this information is fast emerging and the details have not been finalized. I apologize in advance if some of my information is not 100% accurate. Please do not hesitate to contact me if I could be of assistance in any way. Hashem should bless all those who help this worthy cause with endless Bracha.
Adding to the previous post….
Here are a few more details that relate to taxes, payroll etc. Again things are moving very fast but there is definitely a requirement of sorts to pay sick leave. When you speak to your local expert and you get more clarity please share it.
- The filing deadline for individual returns has been extended to July 15. This applies to both filing and paying your 2019 taxes due. All penalties will be waived until July 15. Please note, this only affects the filings of personal tax returns. It doesn’t apply to businesses, nonprofits, payroll taxes, etc.
- Stimulus Cash – the details of this have not been finalized yet but it seems there will be a substantial one or two time cash payout check to families under certain income guidelines over the next couple of months.
- Paid sick leave – The government is mandating a paid sick leave of up to $511 per day for 2 weeks for those who are ill, quarantined, or caring for an ill family member. Those who are unable to work because they are caring for children whose schools have closed are eligible for up to twelve weeks of paid leave of up to $200 per day. The first two weeks are a full salary reimbursement and any time after that is at 2/3 salary. Employees must give notice to their employer after April 2. The employer is to continue paying the employee based on the guidelines issued. The employer will then get a full reimbursement in the form of a payroll tax credit within three months. Self-employed individuals are to be included in the paid leave as well. More details on how to take advantage and the process involved will emerge over the next week or so. As of right now this only applies to employees of companies with fewer than 500 employees.
Payroll tax relief for paying employees UPDATED
Please note the information upon which this is based is fast emerging and the details have not been finalized. I apologize in advance if some of my information is not 100% accurate.
Although not all details are clear one aspect of the bill is a paid sick and family leave. The way this will work is as follows:
Those who are ill, quarantined, or caring for an ill family member are eligible for 2 weeks of paid sick leave. Those who need to care for their children due to school closures will be eligible for up to twelve weeks of family leave. (Naturally, all Rebbeim and staff will be included in the family leave allowance. Keep in mind this refers to their W-2 wages and may not include parsonage or QTR benefits.)
The company must continue to pay the employee for 2 weeks at their full salary for sick leave up to $511 per day.
The company must continue to pay the employee for up to 12 weeks of family leave at 2/3 of their salary up to $200 per day.
Within the next 3 to 6 months the company will be reimbursed in full in the form of a payroll tax credit.
There is real money in this that can literally keep you from drowning! I do not believe there is a legal mosad in the country that can’t benefit from this.
- In an effort to simplify and synthesize everything, I put together the attached PowerPoint. A special thank you to Isaac Tawil for helping me out with it and to Avi Schnall for sharing the guidance received by Aguda’s attorneys. (skip to screen #10 if it’s too much info J)
- For NJ (but probably most states are the same since it comes from the feds)- there is a clear chart attached indicating which employees should file for which benefits
As a reminder, this should not be relied on without talking to your accountant and ballei batim.
Please contact me if there are any errors, updates or clarifications.
- The federal government is offering loans at 2.75% interest for non-profits- here is a link https://disasterloan.sba.gov/ela/
- Different states are passing different emergency bills to lend as well- Find out what your state is doing by talking to your local politicians or those who are politically connected. (you can try googling disaster relief loans for your state and then sort through the results).
- NJ apparently signed something yesterday. We aren’t sure the interest rate and if it’s for non-profits. Avi Schnall told me he is working on finding out and will keep us posted.
- Hopefully you can find a ballei bus that wants the zechus to do it interest free