the full report
Nicole Klein (00:08):
Thank you again for joining us, everybody. I am Nicole Klein with the marketing Alliance, and we are really, really pleased to bring you this panel of experts today to help your agency navigate the new now. And our moderator is our wonderful friend, Greg Olson with GROWL agency. Those of you who’ve been with the Marketing Alliance, formerly the business marketing association. Do you know Greg? He’s a I think, were you a former president?
Greg Olson (00:41):
I was a former president. Yes,
Nicole Klein (00:43):
The president and in 2017 at our fourteeners award we gave Greg 2017 marketer of the year. So we are very proud and privileged. So I will hand this over to Greg.
Greg Olson (00:58):
All right. Thank you, Nicole, for having us all. And again, the marketing Alliance and another wonderful organization, and we’ll make sure everybody who is on I’ve had even people reach out that I haven’t talked to in awhile. So hello to everybody. So let’s go around and talk about who we have on our, this virtual panel. We’re going to be talking about some really, I think, important items as we go through these kind of uncertain times, and really talking about adapting to this new economy, whether you are a consultant, a business owner, a business leader, and employee, these are all going to be very important topics because it affects you in some way or in fashion. So we have John Thai with us from Mountain View Bank of Commerce. Thank you, John, for being involved from a banking aspect. I know we were getting caught up and it sounds like you’ve been working filling out a few applications and helping people with various SBA loans. We have Kelly Johnson, we have two Kelly’s, so it’s going to be Kelly J and Kelly M and a. So we have Kelly Johnston and she’s JFS consulting. Great has a great accounting bookkeeping firm, very financial expert. So we’ll be really looking forward to have what she has to say. And then Kelly Murphy, everything about human resources and more, all those questions that we’re afraid to ask. We can ask today. And she does a great job of helping companies with policies and putting things into place. And now that we’re having work from home, you’re talking about things like taking place, temperatures and what do we have to do for policy writing. And I’m even we’re looking at we’re engaging them to help us with our updating our policies also. So what I do is I’d like to get started. I like to jump right in. We have about a little less than an hour as we go through. I want to remind anybody that we do have a Q and A, if you’re listening to jump in and ask questions on the Q and A functionality of the webinar, and we’ll make sure to jump on and address those. So please ask questions. So first I want jump in with John Tai of mountain view bank of commerce. If you can take a moment and tell me a little bit about how many banks there are, and maybe just kind of jump in what you’re seeing with everything that you’ve been doing, working from home and the bank and helping people with these SBA loans.
John Thai (03:00):
Yeah, absolutely. Thanks. everybody good afternoon. Those that can see my screen and got a visitor joining me. So I am at home. We’ve been at home now for four weeks about a month or so. I work with mountain view bank of commerce where a small community bank in Westminster, Colorado. And just you know, the one branch bank that you know, was created and opened about 12 years ago by a former lender who saw that you know, there was a market for some of smaller businesses that were not given the time by the bigger banks. And so, we focus on community banking and lending and most recently the last three weeks or so, we’re deep in the PPP loans and the SBA assisting some of the small businesses in the community.
Greg Olson (4:23)
Thank you, John. And that’s a really good direction. We’re going to jump more into, especially PPP loans since I just saw the news come through that, that, that has gotten refunded or so we’ll look forward to, you know, I’m sure you’re going to get away to those more. I’m going to jump down to Kelly Murphy and give a quick introduction and I’d like you to kind of start, maybe we can have you talk, like jump into a little bit. We’ve been discussing like, Oh unemployment furloughs, things like that. So do you mind giving a quick overview of that? And I think I have, I’ll pull up a slide as you introduce yourself and maybe talk a little bit about what you’re seeing and how you’re helping people.
Kelly Murphey (04:58):
Absolutely. Thank you for this opportunity and good afternoon, everybody. My name is Kelly Murphy and I have been in the HR world for almost 30 years. I’m not that old, right. But 30 years has given me a lot of experience in different practical knowledge in the HR field. Some people think that’s a little crazy, but I love HR. So we are going to jump onto the slide. We’re going to kind of talk about different questions that we have been asked from our clients and from our friends and our partners. The first one is what is the difference between a salaried employee and an exempt employee? So salaried employees may get paid the exact same every week, but they are still eligible for overtime if they work over 40 hours or 12 hours in a day. So they are considered a salaried employee. An exempt employee has certain criteria they have to meet before, can be considered an exempt employee. They have to meet a wage test. That wage tests starting January one of 2020, jumped to 684 a week. So, they have to make at least 684 a week per week in order to be eligible for being an exempt employee. In addition to that wage scale, they also have to meet certain duties tests. They have to supervise 50% of the time and they have to have at least two employees under there, or they’re an outside salesperson, or they’re a computer certain person in certain fields. So there are different tests. So that’s one of the first things that we get asked is the salary versus exempt. The next is actually the difference between a furlough and a layoff because furlough employees mean that you can actually reduce their hours and they are still employed by you. And in that furlough, you can actually zero out their hours where they are completely off, but they are still employed by you. And they’re still considered as a furlough. They’re still available for benefits. They can be recalled for work at any time they need to be available for that work. A layoff actually reduces them from your staff and you have to pay out their PTO. Their benefits will change. They’ll be Cobra eligible in some cases, if you have enough employees. So it’s not a temporary situation, both of those categories are eligible for unemployment, whether it’s COVID related or not, both of those categories can file for employment. Now, if it’s for unemployment, for the COVID, then we jump into the cares act through the Cares Act. They did come up with the pandemic unemployment assistance program that will help those COVID related unemployment cases get extra help. So, if the individual files for employment, it’s because of a COVID situation, they are either at home because they have COVID, they’re caring for someone who has COVID, they’ve been furloughed because of COVID or they’ve been laid off because of COVID. Then they are going to be eligible more than likely. You never say what the state is going to do, but more than likely, they’re going to be eligible for that unemployment experience when they are eligible and awarded those benefits. The federal government is actually going to add 600 per week for that individual. And it doesn’t matter if that person is a partially laid off person, or if they’re completely laid off, they are going to get the 600 per week. It also extends unemployment from 26 weeks to 39 weeks. And that 39-week extension cam go through December 31st. Now the extra 600 a week only goes through July 31st and up to four weeks, four months. So it’s not through December 31st or anything like that. So, the other thing that we want to talk about, there are some new categories due to the COVID-19 that can actually apply for unemployment in the past, and with regular situations, self-employed individuals, independent contractors’ individual employees who haven’t had a long enough work history. Those are the different types of categories. They haven’t been able to apply for unemployment benefits, but now under this COVID-19 category, they actually can. And that actually started yesterday for the state of Colorado. I actually know someone who went through that process and it was really easy. They don’t ask a lot of information a long drawn out process. It really is a streamlined process for that. So, make sure that if you haven’t been eligible in the past for unemployment check and see if you are now under the Cares Act, because they did expand that category. Another thing that has changed with the unemployment world, it’s normally when you apply for an employment the very first week doesn’t have any benefit. It’s called a waiting period where many States, including the state of Colorado as waived that one week. So, it will retro back to the day that you were laid off or your hours rate were reduced or whatever category you fall in. So those are some changes that we’ve seen in unemployment. So that’s kind of how it affects individuals. How does it affect companies? In the past for regular claims, if you pay a premium in which is called a contributory company, then your premiums actually increase as your CA claims come through because the more the state pays, the more you pay in premiums with anything dealing with COVID claims, those will not affect the premiums for the businesses, but some of our businesses, because we represent unemployed our companies for their unemployment claims, we help them process the claims, the paperwork, and all of that. What we’ve seen is some of our clients have decided that they don’t need to respond to any of the claims because it’s COVID-19, we need to remind our clients and our business professionals that we need to be answering those questions from the state, because if it’s not COVID-19 related, it is going to affect your premiums. And you need to respond with your information to make sure that your information is in there. So the adjudicators me can determine whose fault it is. So just wanted to remind people of that. That’s kind of in a nutshell, Greg furloughs
Greg Olson (12:03):
Kelly Murphy that’s great, that’s a great thank you for all that. A couple of things, there’s a question that came in on, I’ll ask that here in a moment. The other one is one of the things I heard is that for businesses, even though it’s not one affect your COVID or say, we don’t have any people or we’re going on furlough or unemployment, we might run through the unemployment money in the state. And then our, our rates could still go up right through all this. I mean, I mean, that’s what I’ve been reading that we can expect way it’s going that even though our unemployment insurance, it probably will go up just because of what’s going on.
Kelly Murphy (12:40):
Right. Well, unfortunately we can only go with the information that we have today. The laws and the regulations are changing. They were changing daily. Now it’s twice a week. So as it stands right now, they are looking at refunding or refunding, not refunding it, but putting more funds into that, into that case. So hopefully the States will not run out of that, but the States are running out of unemployment benefits. So hopefully with the new PPP loans and things like that, the legislation will take a look and refund those funds as well.
Greg Olson (13:20):
One last question, then we’ll move to Kelly Johnson. So someone asked for unemployment is the $16,000 cap changing, or that be the same, which I’m not familiar with what that is. So yeah.
Kelly Murphy (13:32):
So they may be talking about the individual cap where an employee has to make X amount of dollars to qualify for that expense. For instance, a base period is a three month period. It’s a quarter, you have to make $2,500 field eligible, but that would fall under that new pandemic and employment piece. The other cap is that in, when you are eligible for benefits and you were awarded those benefits, there is a cap of 600, and I think it’s $618 as the most that you can earn. That may be what they’re talking about as well.
Greg Olson (14:18):
We’ll see if they come back with more question clarification. Thank you, Kelly Murphy sounds good. Kelly Johnston. What words of wisdom do you want to start with today? When we’re going through, we’ve been talking, we were talking about tax law. We’re talking about getting what should people think about and filling out their PPP, their financials and things like that, but I’m going to let you take it away versus have questions and just give us some words of wisdom on what you’re, what are you seeing out there as a new world right now?
Kelly Johnston (14:48):
Oh, that’s an understatement in our accounting world. Everything’s shifted quite drastically for those of you that don’t know the Cares Act passed four loans, three grants, and five tax provisions. In addition to a whole bunch of other regulatory guidance around healthcare and our transportation industries, the Cares Act was originally only supposed to be a couple hundred pages and it ended up being 1,404, by the time it was sending done. And we’re looking at a phase four actually going through the process. Now that we’ve been talking about the first question though, that I want to answer that we keep hearing. I mean, my phone has been ringing nonstop over the last couple of weeks is the stimulus and that’s the $1,200 per taxpayer plus $500 per child. A lot of people are calling and saying, Hey, I haven’t received my stimulus check yet. Can you check my status? I don’t have some cool portal to the IRS. I wish I did. That would make my job really easy, but I don’t. So you, as the taxpayer there is an option on the website irs.gov/coronavirus. And there’s a couple of different tools on there to check the status of your stimulus check. However, if you had a balance due return in a prior year, as well as if you had any sort of funky thing on your return, or if the Irish just randomly selected you, your status will be unavailable and there’s no rhyme or reason, or what around that, just so you know, I think what’s happening is there’s such a huge volume of items that are hitting the IRS that they’re just working through them in chunks. I don’t know the rhyme or reason behind like the, how they’re chunking out the distributions of the checks. So please give your accountants a little bit of grace in regard to seamless check status, but you did not have to file a 2019 return in order to receive this stimulus check. And there are some qualifications for income thresholds around that. So single you have to be under $75,000 to qualify head of household 112 five married filing joint, 150K. So if you exceeded that in 2018 and you have yet to file your 2019 and 2019 as a different picture, I’d highly encourage you to file your 2019 return. It’s definitely a tax strategy around those stimulus checks. So that’s one of the questions we’re getting often right now. The other is the different loan programs available. There’s the PPP, the SBA 7A, the SBA express and the idle loans. The idle loan has an opportunity for a grant component originally when the regular rate regulation came out is supposed to be a $10,000 grant. The SBI has come out with additional guidance because they were given the Liberty to do so in the Cares Act. And that’s now kind of paired with the PPP around 1000 per employee. So, the difference is it’s going to be based around your 10–99 income if you’re self-employed individual versus if you do have employees. So that grant process has changed a little bit idle funding and PPP funding ran out early last week. However, we’re hearing that there’s another round of PPP that’s coming out. And so I’m just wanting you, if you’re going through the application process for PPP, that is a paycheck protection program, which is two and a half times, your average monthly payroll, and please work with your lender. So John, this is a pitch to you please work with your lenders because every lender has slightly different requirements for this application. And it’s purely because the lender is the one that’s actually on the hook in terms of the loan, because it is a loan, unless you meet the eligibility requirements for forgiveness. And so I’m encouraging my different clients that have received the funding, keep a separate bank account. Please make sure you’re tracking the expenses specifically to the PPP eligibility. This means having specific chart of accounts like expense line items or those types of things that identify what’s allowable or not. So that way you don’t get yourself in a pickle when say, you know, you hit 74% of payroll constants of the 75 requirement in order to have it be forgiven. Also make sure you’re meeting the requirements of bringing back those employees to get to full FTE status, as well as the full amount of salary expense. It doesn’t have to look a certain way in terms of how you get there, but you do need to make sure you meet the measurement requirements and lenders have been phenomenal about when they give the loan. They give a documentation, a document that says these are what you need to have. And so make sure your accounting records match as well. And then the last couple of things I really quickly wanted to mention in respect of time and wanting to make sure every panelist gets to speak is the different tax provisions that were brought out with the Cares Act. So, first of all, the one that’s most commonly known as the April 15th tax deadline did get shifted to July 15th. However, our nonprofits that have amaze 15th deadline that did not get changed. So be very, very clear that if you were an April 15th, that is the only one that got changed, not our May 15th tax deadline filers estimated tax payments, the April, the June and the September were all shifted, meaning you won’t have a penalty for not paying an equal for equal installments of your estimated tax payments as an individual taxpayer, however, as a fellow tax strategists and we’ll strategist, it’s not really easy to come up with a whole bunch of cash that you’re in. And hence the reason we recommend estimated tax payments. So I still have clients that filed estimated tax payments are in April and we’re respectively in June. So that away cashflow wise, it’s in alignment with where you’re going. And then of course, in terms of actual regulation, qualified improvement, property net operating losses and business income limitations have all changed. Those are like a whole two hour long lesson and its own entirety. So please make sure you reach out to your tax advisor to see how those impact your, your businesses, because some businesses can carry back a loss in 2019 back to 2018, getting a better refund for 2018. So return resulting in more cashflow for the immediate situation. And they’ve also made changes to charitable contributions. So that a way you can get more of a tax deduction for don’t anymore to charities. Because right now our charities are having to cancel multiple events, which is their big fundraisers for the year. And they’re really, really worried about keeping these charitable organizations of flow. And so as a fellow taxpayer, I’m, I’m constantly brainstorming about how can we keep these nonprofits going and functioning during this time when everybody’s really watching expenses. And those are the types of expenses that are going to get cut from a lot of budgets. So that’s a lot in a very short period of time, and there’s a heck of a lot more I can go into, but we’ll stop there for now.
Greg Olson (21:39):
Kelly Johnson, great information. I am going to loop back to Kelly Murphy and a little bit, so stand by. And again, if anybody wants to jump in, but I do want to jump to John Thai please. So we can kind of talk a little bit about what you’re seeing and what would you like people to think about when they’re working with community banks? We’ve had other webinars on this same subject. And when we talked to bankers, I mean, word come up is have a Pell. Some patients that, again, you don’t have the quick line into it. It takes time to work through these. So, I thought maybe John, you can give some words of wisdom or you, you know, the rest of the panelists kind of have this discussion too, but I mean, you process a lot of loans. It takes some time people are coming at you as a lot of different types of paperwork. So, I’ll let you take it from there because I know every banker, I know is working very hard to try to get this done for their customer.
John Thai (22:33):
Yeah, absolutely. So speaking from our community size bank we have, you know, all the decision makers in-house, so it’s very, very fluid. My opportunities, I get to tell the story of our clients, our borrowers. So when you’re working with your lenders, take that opportunity to not just answer questions, but, you know, have a conversation. You know, if you can grab a few minutes of your lenders time and, you know, get to know them and then have them get to know you and your business, because ultimately for me as a lender, I’m going into our boardroom and I’m representing you. I’m telling your story for us, because we’ve had so many applications, we develop a questionnaire as if it’s a quick five question you know, piece where it you’re able to kind of answer and kind of tell your story. So that’s one bit that the be patient part is certainly helpful. But then I would encourage you know, some of would be borrowers to really pay attention to details. Once you get the attention of your lender, they’re, you know, they’re going to give you a list of things that they need, and they’re going to give you some directions. And then if you don’t understand, ask questions, you know, they’re the experts they’re there, there’ll be more than happy to kind of walk you through it. But pay attention to details because, you know, you get your one, one turn in line, and then if something happens and you know, you get to processing your, your application and you miss something it could take a day or two. And then ultimately, you know, back to the line, I threw that joke out. I wouldn’t do that to any client, but, you know, I say, well, back to the line now. Cause you forgot. So and so but it’s, it’s pretty serious, but ultimately from our community bank standpoint, we’re, you know, we’re representing our small businesses. So really get to know our borrowers and you know, get to know your lenders too. Yeah, John, I really appreciate that. And one thing I want to bring Kelly Johnson and talking with these two things, Kelly, you always mentioned to me like what should we have? You should have a relationship with a banker, a lawyer. You tell me, you cut out.
Greg Olson (24:59):
Yeah, John, I really appreciate that. And one thing I want to bring Kelly Johnson and talking with these two things, Kelly, you always mentioned to me like what should we have? You should have a relationship with a banker, a lawyer. You tell me, you cut out. Did you hear her? No, I think you cut out Kelly, hold on Kelly, Kelly or Nope. So, we can’t hear you, but I’ll say banker, lawyer…
Kelly Johnston (25:20):
Financial advisor, accountant, bookkeeper, and insurance provider and HR specialist. And your accountant and bookkeeper should be two separate people. Or if it’s a firm that offers both those services, eventually they should be divided because bookkeepers in the weeds, accountants a bigger picture.
Greg Olson (25:37):
Yeah. So I think those are great resources to think about as any size of business. As you kind of grow through this because you’re all going to need them. I’ll tell you that from just especially now we’re going in as kind of new economy or adapting to a new economy, you cannot do this alone. I’ll tell you that right now from me having a business for a long time, when it’s easy, you don’t really need your accountant as much, right? You can just, you know, go through it or maybe you don’t need an HR person because all your employees are happy. And then all of a sudden you’re like, crap. I we’re not happy anymore for some reason. And a banker. I was like more important., what helped us is really having strong relationship with our bankers even through good times. And then when the bad times come, that’s where you want to reach out to John and be like, hey buddy, how you doing? Hopefully it’s not the first time you guys have talked or had an email or a beer or lunch or something, because I think, you know, I always tell people like, take your banker out, take your account out, do something, get to know what’s happening out there. Cause they’re really going to have your business in the best interest. So, I’m going to move to Kelly Murphy. We had a question come in and you can clarify the 16K item. So we have a question. This comes up a lot as a single owner entity. And I think maybe all of you could help answer this too. So if I was a single owner entity, right, I’m my own, I’m my only employee. So is unemployment available, ethical, legal, if I’m still hurting a small amount through existing retainers, but potential business owners have definitely taken a huge hit and growth has stopped. So, you know, we’re seeing this like what is available to me as a single owner entity, a consultant the gig economy, those kinds of things that we’re seeing, but you know, having an LLC in that. So, what advice do we have?
Kelly Murphy (27:21):
Effective yesterday? In the state of Colorado, you definitely can file for unemployment. If you are a self-employed owner, is it ethical? I think it is because during this COVID-19, it is affecting your business as well. It’s reducing your opportunity for leads. It’s reducing the opportunity to go out and find new customers and even your existing customers, it may be reducing what they’re able to do with you. So absolutely if you are full and you haven’t been reduced, and that’s a question that you will have to talk to yourself about an answer to that, but with the reduction of people pulling out on jobs that they have bid on things like that. Absolutely. I think that it is ethical and it is legal and it is available to you right now through the state of Colorado, at least. And they made that, that website live yesterday,
Greg Olson (28:25):
Kelly Johnson. Do you have anything to add to that or from when we’re talking about unemployment anything that you’re seeing or things to consider about tax ramifications, because a lot of people on appointment right now. So I’m wondering what advice you might have with that too.
Kelly Johnston (28:39):
Thank you for seeing me leaning forward and wanting to talk the, yeah, the unemployment aspect. One thing I would always caution people about unemployment and some of these grant opportunities can become taxable income if you’re not careful. So you get to make sure you’re having appropriate withholdings withheld. My challenge question back to you is what can you be doing now as a business owner using your current expenses to find new ways to generate income? Because we’re going to go into a pretty large economic contraction over the next 24 months. And so, my challenge to all my business owners has been, okay yes, it doesn’t look the same way business has dropped off. And I completely understand that in the short term, you might want to look at that unemployment as an option, but I also challenge you right now is a really great time to look at your business model and see where you’re going to go with it. I just had a pottery studio who used to serve food and wine while people did pottery, just open a food delivery service because they already had the food handlers’ card and they wanted to keep their employees employed and moving forward. So to me, the creativity is the opportunity right now. And especially in the field of marketing and the marketing agency aspect, it’s going to be a cost that people are going to want to cut, but you get to show the ROI on that and how you can help people increase market share in a time when you need to grab market share. Because if you’re not first, you’re going to be pretty behind the curve. So that’s my challenge to that question.
Kelly Murphy (30:00)
I agree with what Kelly saying, this is the opportunity to find new lines of service branch ciao, and don’t have just one line so that when we do have these types of things happen, look at your emergency preparedness. How are you going to pay your employees? How are you going to cover your finances? What other lines of services can you incorporate into your business and get creative in it? So thank you, Kelly, for adding that.
Greg Olson (30:24):
Yeah. And I’m going to say like when I’m, when I’m seeing him, I really love John here. And it was a question on the PPP Jones. So get ready. I you know, I agree there’s a lot of companies that have stuck their head in the sand and I think we’re just not where we’re scared or they don’t know what to do. They’re, you know, maybe they add all hospitals, and they all went away right now is really the time to reinvent yourself and really start to reach out and help people. I think we’re getting requests. I mean every day new business requests because we’re available and our team is kind of on that hustle and grind mode right now, much. Like I felt when I started this company, you know more, 10 years ago, it was that kind of hustle and grind kind of mentality. And now I think if you have that same mindset that entrepreneur or that startup that, you know, you’re going to, you’re going to survive. And all of a sudden you’re going to realize you’re going to find new business opportunities. So I want to switch to John and Kelly. We’re all talking about this, about the PPP. You know, now that you, what happens, John, when someone gets these loans or any of these SBA loans, how do they, what, what record keeping is a bank needing from them? And I know Kelly Johnson might be able to add to this too, like, you know, what should we do now? I have an account. I have X number of thousands of dollars sitting in this account with you. You know, I know I just can’t go and take it out and buy a boat. I have to do, you got to monitor it. I have to use it for the right thing. I just, those now that we get it, it’s a lot of stress. One to get the money. Not that you get it, you feel a little less stressful, but now you’re stressed that you have it because now you have to do the right things. So I’d like to have a little conversation about that. Like how do you keep us out of trouble?
John Thai (32:02):
Yup. So Greg, you took my line. I use that line probably half dozen times a day. You know, now that you have the money don’t pull up to the bank with a new boat and then ask for forgiveness, right? Or a new car it’s you know, for, for us. So the government and yesterday has given the lenders, the power to underwrite, these loans. And so specifically with our bank, we have decided that we’re going to help all of our borrowers and making sure the use their funds is forgiven. At the end of the day, we don’t want our borrowers to have a loan you know, in eight weeks and frankly the bank doesn’t want to have to monitor, you know, a loan eight weeks from now that the covenant with the government watching over us. So the first point that the, the highest priority for me is to, you know, you with the grant or the award that you received it might not be I guess it won’t be enough obviously, so I would take the, the obvious forgivable expenses and put towards, put the money towards that first. So certainly all your payroll expenses, you know, if you’re paying employees and then if you have rent to pay, those are, you know, a couple of big expenses that you can are for sure. Forgiven. if there’s anything questionable, like, you know utilities is a part of the forgiveness piece, but there are some gray areas between what, you know, what is considered utilities and what isn’t. Those are, you know, one-offs couple of hundred dollars here and there. I would say save all of those until we have used up all the other funds towards the obvious forgivable pieces. As far as the documentation we are, our bank is a modern starting it draw by draw. So we didn’t back the truck up and give you all the money at once and hope, you know, we see you in eight weeks where we’re hand in hand with this and, you know, we’re going to partner with our, our borrowers. So you know, we, we request that they keep some documentation and payroll reports you know rent payments, leases, that kind of stuff is pretty easy to keep. And then we I told him that we would be monitoring kind of a spot check here and there, but it would be up to them to keep those records.
Greg Olson (34:47):
Kelly Johnson how are you going to ask people? So, I come to you with this, I’m going to make up a number $40,000, and you’re my accountant or bookkeeper, you know what words of advice do you have again, I have a relation with the bank, you know, that, and then now we have you, and you’re like, what should we think about?
Kelly Johnson (35:09):
Well, I actually just did this coaching session with a client, like right before this tall, cause they got fully funded. So unlike some banks that are funding at one drop at a time, this particular scenario that was fully funded in an account. So I’m a big proponent of separate bank accounts anyway, for certain functions, I’m a profit first believer and a Dave Ramsey envelope system fan. And you can, you make envelopes out of bank accounts the same way. And so, knowing that I’ve actually talked to a lot of my PPP clients and saying, use it as your payroll account first and leverage those payroll funds, make sure you should have a budget or a cashflow plan anyway, for the next eight weeks to a couple of months. And if you don’t definitely use the prior data to jump into that process, so that a way you can make sure you meet that 75% threshold because note that federal taxes and certain types of earnings in the payroll don’t get calculated as part of that 75%. So I’m challenging people to leverage those items first and use it for that. And then you can cover rent utilities and mortgage interest respectively with the rest of the funds. However, as John mentioned, there’s a lot of specifics around those items. And so again, I’m telling my clients cover payroll first, then leverage what’s left based off of the measurement period. And a lot of it is timing as well. So whenever you get funded compared to the eight weeks, and then also comparing that measurement period to what you had prior to funding or whatever measurement period, the bank used to give you your loans, you need to make sure you’re keeping the same FTE count and salary and wages, or get up to a certain salary and wage amount by a certain date to meet that. And so we’re doing that through payroll tax filings and payroll reports. So 941’s and having that all in play for those that are self-employed, this includes your 10–99 income it’s box 31 on the schedule C. And so that means income minus expenses. And you’re tracking that month by month, just like you attract payroll. And so really making sure you’re meeting whatever the lender’s requirements are for the forgiveness. Cause like I said, every bank is slightly different.
Greg Olson (37:25):
That’s good information. So I mean, there’s a lot, I said, I, I would advise if you have this type of loan to have us open up a separate bank account for it as well, if you have a payroll system connected to that. So I would just take payroll out of that, if you can handle that from a funding standpoint and just use it for that and stretch it out as long, as much as you can, I think is probably my advice from running a business. And now when you’ll have clean records and things like that, it’ll make it so much easier for the loan forgiveness. Are we positive? It’s going to get the loans are going to get forgiven or is there going to be new rulings coming out? I’ve heard a lot of questions. People are asking me, I’m not an expert. You’re like, I’m really nervous about taking on this debt and I don’t know how to answer it because I think they feel like things are changing. So, I mean, you kind of mentioned this, everybody. I know if we can have a John or the Kelly’s, anybody heard these things. Yeah.
John Thai (38:22):
I’m our bank we’re fairly certain that it will be forgiven and not much will be changing. We’re taking the angle that if things are changing, you’ve already signed the note that you know, that, that governs the loan slash grant that you’re getting. So, you know, there’s a little bit of fine print in that note, but it’s all SBA jargon and we come straight from the treasury department on how they’re going to forgive it. So we copied and pasted and put it into our note. So that’s a, you know, you’re alone is governed on that even if things do change in the next couple of weeks.
Kelly Johnston (39:02):
Yeah. And to piggyback on that every loan that I’ve seen dispersed thus far has an amortization schedule attached to it. And as well as the fine print with that amortization schedule, my biggest fear from an accounting perspective is seeing a whole bunch of small businesses leave this pandemic with a bunch of debt that they can’t repay. And so what I’m telling my clients is, yeah, there’s an aspect of forgiveness aspect and making sure you’re meeting the eligibility requirements, but at the bottom line, you are still required. It’s a loan until you meet those eligibility requirements. And most of them are doing like small, a hundred dollars payments starting in October. And then there’s this huge balloon payment at the end of the two year term period. And so, I’m challenging again, business owners to think that, you know, make sure you’re meeting those eligibilities and if not, no, you’re going to owe the money back. Cause I hear that as well. Like what happens if I don’t bring all my employees back? Well, you, you’re not going to meet some of the eligibility requirements and there’s a measurement period for that. And so you get to know that it’s a loan at that point. Granted it’s a very low interest rate loan, but it’s alone, nonetheless. And the same goes for any of the other SBA or idle loans or grants. All of those are loans. And so again, my whole philosophy from day one and Greg knows this because he was on one of the first panels I spoke on a couple of weeks ago is you need to make sure you’re selecting programs that are part of your five-year plan. And not just part of this, like get me through this moment kind of thought process. Don’t get me wrong. Those are great too, but this is still debt. One way or another, and you get to work with your lender to make sure that it’s the right move for you. Yeah.
Greg Olson (40:36):
I, I go on the line like even though it’s not, I always feel like nothing’s free, but so that be planning to budget to have to pay that on your books. And then if it, like, everything goes out the way it does, but my, it could happen that it’s not forgiven right away. Just because I can’t imagine how they’re going to process these millions of loans out there. Right. That are, they’re trying to cover it. So the thing it’s just going to take, it’s going to be an odd to work closely with your banker. Had a question come in, John, and maybe the Kelly’s can answer, but what if you were to add employees right now with the PPP money? Is that forgiven? We went back because it was calculator or last 12 months and they had that average. So now if you’re growing and all of a sudden you’re like, man, I need to add people. I, I mean, I guess it’s like your average of the people you have. If I have 10, now I have to end up with 10, but if I had 12, well I’m paying them. So I don’t know. I mean, I think we’re answering the question, but if you guys have any feedback that the extra is non forgiven, right?
John Thai (41:38):
Well, the, the SBA has a strong, strong they have a strong component of generating new jobs. And there are a lot of their loan products ask specifically how many jobs are you keeping? How many jobs are you going to create or are planning to create? So my understanding on this loan is we’ve taken the average of the last 12 months put a multiple on it. So you have that money to grow your business, or, you know, in some cases kind of just keep the doors open, but if you’re lucky enough to prosper and grow and, you know, bring on more employees the, the problem is that you’ll just run out of that money. You’ll be able to pay them sooner than the eight weeks. So that’s actually encouraged
Greg Olson (42:28):
Kelly Murphy, go ahead. Yeah.
Kelly Murphy (42:31):
If I can add to that, those employees that you have furloughed and you have laid off, even if you don’t have work for them to do right now, you bring them back on your payroll. You can, you can pay them to look at policies and procedures. You can look at, you can pay them for you’re sitting on their couch, as long as they’re back on your payroll. That’s going to cover that PPP requirement as well. So if you have furloughed people, if you’ve laid them off, rehire them, make sure that you’re meeting those thresholds
Kelly Johnston (43:00)
And it doesn’t have to be the same employees either. So if you did have a transition and employment, but you will have five FTEs counted, as long as you have five FTEs and total salary match, that’s what matters. And then in the long-term a game it’s kind of like the affordable care act and how it used to measure measurement periods from Mecca meds coverage for 50 or more employees. It’s the same exact measurement. You’re just comparing prior periods to the current. It doesn’t matter the actual individual though.
Kelly Murphy (43:30)
Right. But if you aren’t going to bring employees back, you need to make sure that you’re meeting certain criteria for that, so that you’re not setting your company up for discrimination. Even if it’s just perception, you need to make sure that you’re, you have solid and criteria on why you are or not are not bringing someone back.
Greg Olson (43:47):
Yeah, that’s good. We had another question come in and then we kind of talked about this, but is there a benefit to managing your PPP draw take it draw by draw or paid in full, and I think you, that’s working with your bank, most banks. I know. And you can talk to that team is that they’re kind of managing it with you, that requesting how much you need, and then they’ll transfer it into your payroll account versus you going and saying, okay, I’m ready to take my $40,000. And then I think they’re doing a drop. You’re doing a drop by drop. I think that’s bank by bank John. Or is it, is there a ruling on that or just kind of?
John Thai (44:25):
No ruling and all of that is bank by bank. For us again, we’re partnering with the small. In candidly, you know, we don’t want to manage that loan at the end. So if, if the borrower client takes on a full lump sum of 40,000, then ultimately they’re taking on that risk themselves and the bankers kind of steps back. You know, if, if you know, I would imagine some of the bigger regional banks may not have the, the close knit relationships. And so that’s the route that they’re taking. If you share the draw process it’s no more than, you know, four or five transactions in the next eight weeks. Then you can have someone double check your work. If you’re concerned about having to pay this loan back, you know, if your is giving you the thumbs up, that’s certainly a good sense of a good, good feeling that you know, it’s going to be paid back and you’re doing things the right way.
Greg Olson (45:29)
Perfect. And I think we always get this question too, when we do, these is FTEs full-time equivalents. What about part-time employees? How the heck do they fit in? If I have, you know, five full-time and four part-time, how does that fit into this PPP equation for anybody that wants to answer that?
Kelly Murphy (45:49):
So I can take that one. So full-time equivalent is basically based on 40 hours a week. So how many employees does it take to meet that 40 hours? So if you have two employees who are part-time and it’s 20 hours per week, they will equal one FTE because the 20 plus the 20 equals so 40. So when we talk about FTEs, it’s how many employees will it take to meet that 40 hours?
Greg Olson (46:14):
Okay. Thank you for that. That’s great. I’d like to move on. We have a couple more minutes here, but I wanted you know, Kelly Murphy policies, you, when you’re talking about things, like where is it going? You know, like small business, I’ve been I’ve grown, I’ve been doing it 20 years. You know, like, can I Google human resource help? I mean, doctor, like I have Google doctor help I’m joking, but I think, you know, what’s why, why should we look for human resources, a small health plan, a small business, whether you’re you have two employees or 20 or 50 or whatever. I mean I mean, we can answer this, but I think we should all talk about this as a group and say, how does this benefit you? And I think there is, it saves you money while I love it. What are you seeing out there? What tips do you have? Keep me out of trouble.
Kelly Murphy (47:04):
So that’s kind of funny. I have twin daughters who are in med school and when they hear Google Doc, they freak out. Yes, you can find anything you want on the internet. You can find the pros and the cons for any situation that you want, where you get in trouble. Is am I looking up the right information? Am I getting the right law for my state, for my locality? Am I, do I have the expertise to, to keep myself out of trouble? So it is much like going to WebMD. Yes. You can find the information, the forms, the policies do, you know, do they meet your particular situation? Non-Profits small business versus large and things like that. So in this situation, that policies that I would be looking at, if I were a small business owner, I’m looking at different policies that I need to have in look at your handbooks. When was the last time that it was put in place, even without COVID 19, there are laws constantly. We have the new comps slide in Colorado. We have the equal pay for equal work coming up. We have and the box, if you will, all of these different things in the last couple of years, we’ve had personnel file laws and regulations. Are those in your handbooks? Make sure that that compliance is in there.
Kelly Johnston (48:34):
No, I want to add one thing. This HR handbook does matter if you’re a single man. I’m just going to tell you that right now, because it does come back with some serious guidance around meal policies, mileage reimbursement, like you were a normal employee, and that gets to be in your handbook as an accountable plan. We have a really cool little video we put together on our website as free info. If anybody wants to piggyback on what Kelly’s talking about, because I’m going to tell you those employee handbooks matter, even if it’s just you.
Kelly Murphey (49:04):
That’s, it really does. And this becomes the structure of your, of your company. When you follow those particular structured processes and stuff, it keeps you out of discrimination because you’re not treating people differently in different categories. I would be looking at I’ve laid people off I’ve I furloughed do I have a policy where I can recall them? What does that look like? How do I return back to normalcy, emergency preparedness plans, things like that. Can I take an employee’s temperature that is completely different than what we’ve been able to do in the past? ADA and EEOC, that’s off limits. Well now with COVID it’s not off limits. So what criteria do we need to put in that working remotely? Wow. Have we exploded into that network? So do you have those processes in place? How do your employees engage with you? Do you have weekly reports that they have to fill out? So all of these different things that have come about because of this they’re good business practice to take a look at we are actually putting together email blast, if you will, on how do we return to whatever normal looks like, looking things like, what is the workplace looks like? What does the work environment look like? And things like that. And definitely at those policies in that handbook is a part of that.
Greg Olson (50:30):
I agree. We’re actually like, we’re, you’re going to help us redo ours as we’ve grown and gone from like a couple pages to now. And it comes over time with questions and as you have different policies and hiring and interns and it’s part-time and full-time, and it just, if you have, I agree with you, if you have a policy, you don’t have to remember, like, why did, what did we do for so-and-so and what do we do now? What do we pay people? Why, why did we do that? And I guess it is that protection. So I appreciate you bringing that up. I want to bring Nicole on with a couple more minutes. We have as a business owner, you know, and you’re working through all this too, like us other business owners are, you know, everything we’ve been talking about. What have you, what are you doing? Or what do you see? Or any words of advice for all of us?
Nicole Klein (51:21):
Yeah. So I’m just a recent business owner. I closed on this, I’m buying a 20 year old business on February 14th, right before the meltdown. So what I have done, we’ve always been a remote work team. We’re very virtual. But what I’ve implemented is a lot of communication bridging, we’re used to working remote and, and they like us to leave them alone because they know the work they have to do, but really kind of bringing more of a family together with regular zoom calls. I, it was really funny when we implemented the very first zoom call. Everybody’s like, I saw my warehouse managers ear a lot and things like that, but really kind of bringing us together as a family. And I think that that has really, really helped our team migrate from an already remote to a more cohesive family. There were various reasons, but, you know, I, I had to ask them to take a small pay cut. But I’m allowing them to take a day off because we just don’t have to work. But yeah, those are the kinds of things is trying to really focus on the care and the nurturing of our organization as a whole entity and kind of keeping us together so that we’re not feeling solo and scared in our silos.
Greg Olson (52:49):
Yeah, those are really good. Nicole, thank you. Because I, what we found from our employees too, is they go home to their spouses or significant others or roommates or whatever we have and, you know, they’re all, each of them dealing with different things and their families and, you know, that’s a lot to manage too. And I think, I don’t know if there’s a policy, it’s hard to have a policy for caring, but also running a business. Right. And so there’s some hard decisions that have to be made. And I think by, over communicating with them is probably the, is you know, we have ongoing meetings trying to have 10-minute meetings with our employees to be like, how are you doing, that’s what our expectations are.
You know, like, you know, just working through things and it has been that challenge. Nicole, thank you for that. And congrats on being a business owner. I don’t think there’s a right or wrong time to get involved. And if you will work, you work through this, you’ll be prepared as we’ll go through, I’m going to start wrapping up for, at the end of our hour. But I do want to go around everybody. And I’m going to start with Kelly Murphy and I’m going to just really ask if you have any final tips. And if you have a website link or something for a video or something like that, let’s give it out there. People can write it down and we’ll make sure that Nicole sends it out, but a final tip on this, everything we’ve been talking about, and if you have a work from home tip I’d like to hear it. Let’s go around Robin and then we’ll close up. So go ahead, Kelly Murphy.
Nicole Murphy (54:13):
So number one tip, set boundaries. When you are working at home, when you’re working remotely, it is so easy to just start and never stop. When we go to work, we get in our car, we go to work, we start our day. At the end of the day, we get in our car and we come home and sometimes working at home, it’s hard to put those boundaries in place. So put boundaries in place, have a start time and an ends time and give yourself grace. When, when you’re not making the best choice, it can be fixed. It really can be fixed, maybe hard, but so work schedules, even though you’re at home and give yourself grace. And our website is LightHouseHRS.net, and we have a blog up there. We do an update at least once a week, as legislation comes out. And again, this next update that we’re going to have is how do we return to work? What do we need to look at in our workplace? How do we bring our employees back? So thank you for the opportunity. I really appreciate it. I love working with this panel. Have a fantastic day.
Greg Olson (55:25):
Hey, John what do you think any last tip be nice to anchor? You know, what do you got?
John Thai (55:35)
Yeah, I’ll try to make it quick. You know, we, we talked a little bit about ethics you know, if you’re fortunate enough to receive a grant and some of those funds you know, the purpose of that is to get employees back into the workplace and getting people paid. So I feel a great sense of fulfillment to be able to help the small businesses. And I hope that, you know, when the money gets out the door that the business owners are doing the right things and getting employees back one example is I have a small neighborhood bar. They’re not open yet. They’re not going to be open for another two weeks, but he got his first batch of money and he’s got his employees in the bar cleaning. And they’re happy to clean. They’re happy to get paid full time to clean. So just a little piece of ethics and I’ll how shadow off Kelly. My thing was the grace you know, work from home is brand new to me. I’ve always been in the field. So being at home and having my three-year-old join, my zoom call is, you know, kind of the norm now. So, I mean, I think it’s okay. And I hope everyone else thinks that’s okay too.
Greg Olson (56:48):
Yeah. Kelly Johnson final tip and work from home.
Kelly Johnston (56:53):
I just say the final tip would be as a business owner, entrepreneur employee right now, mental health is more important than ever before. So take the time to refill your cup because you can’t sell others from an empty cup that includes taking care of you. I know I am a big, I get guilty on this. I’ll work all the time. If I don’t set the boundaries that were set up ahead of time. So again, take care of yourself. It’s a very, very important and in the, in the long run really again, this is our time to be creative as entrepreneurs. So I challenge you to look into your creativity box and, and start to figure out what really can serve you and your community as we go back to work. So, follow us on Extreme Movement LLC, we have social channels through Facebook, Instagram. We do a really cool podcast every week. That’s free content about who should be a member of your team, or, you know, some cashflow and an economic crunch, those types of things. So, follow us there education-wise and then JFS is our accounting firms. So looking forward to supporting you,
Greg Olson (57:57):
And Nicole last but not least your work from home, what’s happening over there. You going to, I mean, you learning to play guitar or anything like that?
Nicole Klein (58:09):
Well, I’m learning to shut my door. We have four people working and doing school in the house and yeah, just sort of creating spaces where we can focus. So that’s, that’s kind of my work from home to I loved this panel discussion. We got a wonderful question right at the end about business, new business development strategies. And I think that that is a brilliant shift topic for our next one of these, I don’t know who will be on the panel. So whoever message that if you want to email me at, in Klein, K L E I firstname.lastname@example.org we’ll be sending out all these links and things like that. I’d love to hear more about what types of things you’re looking for, so we can assemble another panel. So, great question. And thank you. And thank you for staying tuned and allowing Marketing Alliance to be your partner for engaging, you know, content that you need right now. So
Greg Olson (59:16):
Thank you everybody. I appreciate again, being on this panel and helping guide the conversation. Thank you for all the help you’re doing out there for all of your customers. I know every day is a new day. It is in my world. And again, keep smiling and we’ll do what we can, and it was that I wish you all a wonderful day and we’ll get a link out to everybody on this webinar in the near future. Everybody have a great day.
Thank you. Bye. Thank you. Bye-Bye.