Focus on payroll for loan cancellation, according to experts

The most attractive aspect of the paycheck protection program – the possibility of a loan forgiveness of up to 100% – is still surrounded by an intimidating combination of government vagueness and public confusion. With the program receiving a second influx of money, the Home Furnishings Association hosted a live COVID-19 webinar on Tuesday to help clarify with members and other furniture retailers how this loan forgiveness can be guaranteed.

HFA Executive Vice President Mark Schumacher spoke with HFA lobbyist Chris Andresen and attorney for Sidley Austin Michael borden in the hope of clearing up some of the many questions from retailers.

Andresen and Borden said there is still a lot of unknowns about the specific rules governing loans, but they said the best solution for retailers is to follow three simple steps to ensure your chances of forgiveness:

Cover the payroll

Use the bulk of your federal payroll relief – at least 75 percent. “It’s the biggest,” Borden said. “The government is going to want to see that you keep your employees on the payroll and protect them. “

Not too much payroll

When paying your sales staff or managers with high commissions, be careful not to pay them more than $ 3,846 per two-week pay period. If you do, Borden said you should know that any amount over $ 100,000 a year will not count as forgiveness. Borden said the Small Business Administration is still working on the details of this and other part of the loan cancellation, so it’s best to play it safe.

Other eligible expenses for utilities and mortgage interest and lease or rent payments.

Start now

If you received a PPP loan, you need to start spending the money. It must be used within an eight week window that begins when the loan is originated or is deposited into your bank account. Andresen said retailers need to ensure their pay periods are within the 56-day window. “You have to be flexible with your payroll, but make sure everything is within that eight week window,” Andresen said. Loan funds spent after eight weeks will not be eligible for a rebate.

While the terms for documenting how you spend your loan money haven’t been defined, Borden said it shouldn’t be too complicated. “This program was designed for small businesses that aren’t used to sophisticated record keeping or accountants, but that doesn’t mean you can get lazy,” he said. “Save your receipts. You need to show your bank where the money has gone, whether it’s payroll, rent, or utilities.

More relief can come

Borden and Andresen also said they expected a fourth coronavirus relief bill to start taking shape in May with possible completion around Memorial Day. “From what I’ve heard, the size and reach is going to make everything else look small,” Borden said.

The plight of the airline, restaurant and hospitality industries has been widely recognized. Borden said the retail industry needs to speak up as well. “Each sector must make its voice heard,” he said. “If you don’t, you will be left behind. If you don’t ask in a group, they’ll think it’s okay.

As always, the HFA will continue to defend its members.

Thursday Webinar: Todd Wanek

Tuesday’s webinar was the last in a series produced by the HFA in response to the coronavirus pandemic. Ashley Furniture Industries CEO Todd Wanek will discuss the state of furniture supply chains as retailers prepare to reopen stores on Thursday.

All HFA webinars can be viewed online at HFA COVID-19 Recovery Resources page.

[PPP Loan Forgiveness FAQs]

About Hannah Schaeffer

Check Also

Indonesian priest’s hydropower project loses its spark

Almost ten years ago, Father Marselus Hasan made it his mission to provide hydroelectric power …