Banner Corporation · NASDAQ:BANR
Banner — PPP Loan Forgiveness webinar (June 2020)
25 slides from Banner's conference presentation, June 2020
Slide 1: PPP Loan Forgiveness
©2020 CliftonLarsonAllen LLP PPP Loan Forgiveness WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor
Slide 2: Disclaimer
©2020 CliftonLarsonAllen LLP Disclaimer • This presentation is for educational purposes only. It should not be construed or relied on as legal advice or to create any client, advisory, fiduciary, or professional relationship between you and CLA. You should consult with your legal counsel if you have
Slide 3: Recent Developments
©2020 CliftonLarsonAllen LLP Recent Developments WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor
Slide 4: PPP Flexibility Act – June 5, 2020
©2020 CliftonLarsonAllen LLP PPP Flexibility Act – June 5, 2020 • Extends Covered Period to 24 weeks – Existing borrowers can retain 8 week period – IFR issued 6/22 clarified that borrower can request forgiveness before the end of extended 24 week period • Set minimum term for new loans at 5 years •
Slide 5: PPP Flexibility Act
©2020 CliftonLarsonAllen LLP PPP Flexibility Act • At least 60% payroll test/no more than 40% nonpayroll – Originally interpreted as a minimum threshold for eligibility – Interim Final Rule on 6/10/2020 clarified that this will be applied as a proportional forgiveness test ◊ treat the same as the pr
Slide 6: PPP Flexibility Act
©2020 CliftonLarsonAllen LLP PPP Flexibility Act • Safe harbors for FTE reduction test – Not able to rehire previous employees AND are unable to hire similarly qualified employees for unfilled positions – Unable to return to same level of business activity due to compliance with OSHA, CDC or other r
Slide 7: Loan Forgiveness Application(s)
©2020 CliftonLarsonAllen LLP Loan Forgiveness Application(s) • Loan Forgiveness Application (and Instructions) updated 6/16 • New EZ Form and Instructions issued 6/16 – Self-employed with no employees – Meet safe harbors for no wage or headcount reductions – Meet safe harbors for no wage reduction a
Slide 8: Loan Application Insights
©2020 CliftonLarsonAllen LLP Loan Application Insights • Caps on wages for employees and owners (see below – based on IFR) • Clarifications on health insurance and retirement plan costs includable for owners • Safe harbor application – Wage and FTE elimination measured at earlier of 12/31 or forgive
Slide 9: IFR issued June 22nd
©2020 CliftonLarsonAllen LLP IFR issued June 22nd • Forgiveness timing – Can apply before the end of CP once all loan proceeds used for which forgiveness is requested – If wage reduction applicable, apply for full 24 weeks – No guidance on implementation beyond wage reduction – No guidance on how to
Slide 10: IFR issued June 22nd (Continued)
©2020 CliftonLarsonAllen LLP IFR issued June 22nd (Continued) • Owner-Employee matters – Includes owner-employees of C-corps ◊ Cash comp limited to 8 weeks or 2.5 months of 2019 comp ◊ Can include ER paid healthcare and retirement – S-Corp owner-employees ◊ Cash comp limited to 8 weeks or 2.5 months
Slide 11: IFR issued June 22nd (Continued)
©2020 CliftonLarsonAllen LLP IFR issued June 22nd (Continued) • “Business Activity” Safe Harbor – Exempts from FTE Reduction test – Document reduction in business activity during CP stems directly or indirectly from COVID requirements or guidelines set by HHS, CDC or OSHA ◊ State and local governmen
Slide 12: IFR issued June 16th – Revisions to IFR's
©2020 CliftonLarsonAllen LLP IFR issued June 16th – Revisions to IFR’s 3 and 6 • Additional conforming changes • Clarified payroll limitations – Employees (8 or 24 weeks) – Owners (8 weeks or 2.5 months (if using 24 week CP)) Create Opportunities 12
Slide 13: IFR issued June 10th – Revisions to First IFR
©2020 CliftonLarsonAllen LLP IFR issued June 10th – Revisions to First IFR • Starts to bring PPP Flexibility Act into Rules • Clarified 60% payroll requirement will be interpreted as a proportional limit on nonpayroll rather than a threshold for receiving any forgiveness • Clarified that new deferra
Slide 14: IFR on Loan Forgiveness (May 22nd)
©2020 CliftonLarsonAllen LLP IFR on Loan Forgiveness (May 22nd) • Concept of Paid or Incurred and Paid Eligible for Forgiveness • Payroll Costs: – Bonuses and hazard pay are allowable – Line 9 (all subject to $100k annualized max – currently $15,385, maybe higher) ◊ For owner-employees (W-2 in S-cor
Slide 15: SBA Review Procedures (May 22nd)
©2020 CliftonLarsonAllen LLP SBA Review Procedures (May 22nd) • Will have 6 years to review – Potential impact on future merger and acquisitions • Elements of review – Eligibility (except for “necessity” safe harbor if < $2 million) – Loan amount and use of proceeds – Loan forgiveness • Unclear if $
Slide 16: Forgiveness Basics
©2020 CliftonLarsonAllen LLP Forgiveness Basics WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor 16
Slide 17: Payroll Costs
©2020 CliftonLarsonAllen LLP Payroll Costs Payroll Costs Salaries, wages (includes PTO, sick pay, separation Group health care Employer Retirement portions of payments, etc.) – benefits benefits state/local payroll limited to $100,000 taxes annualized Create Opportunities 17
Slide 18: Payroll Costs
©2020 CliftonLarsonAllen LLP Payroll Costs • For bi-weekly or more frequent payrolls - Alternative Payroll Covered Period (APCP) starting first day of first pay period following PPP loan disbursement • Submit on Schedule A and Schedule A Worksheet • Flexibility to include costs incurred during CP or
Slide 19: Payroll Costs – Limitations on Cash Compensation
©2020 CliftonLarsonAllen LLP Payroll Costs – Limitations on Cash Compensation 8 – week period - $15,385 • Employees – based on comp during CP/APCP • Owners – based on 2019 (W-2, Schedule C or K-1) 24-week period • Employees - $46,154 (24/52 * $100k max) • Owners - $20,833 (2.5 months of 2019 amount
Slide 20: Payroll Costs – Non-cash Costs
©2020 CliftonLarsonAllen LLP Payroll Costs – Non-cash Costs • Non-cash payroll costs (healthcare, retirement, ER state taxes) must be paid during CP or APCP • For owners- – Health care costs excluded for SE, GP and S-Corp Owners, only included for C-corp owners – Retirement contributions ◊ Excluded
Slide 21: Non-Payroll Costs
©2020 CliftonLarsonAllen LLP Non-Payroll Costs Interest mortgage obligation Rent Utilities Interest on other debt obligations* • Contracts must be in place as of 2/15/20 • All the above are considered non-payroll costs *May not be considered for forgiveness Create Opportunities 21
Slide 22: Non-Payroll Costs
©2020 CliftonLarsonAllen LLP Non-Payroll Costs • Flexibility to include costs incurred during the CP if paid on or before next regular billing date • No prepayments of future interest on mortgage debt, but unclear about rent and utilities expenses • Potential to include additional non-payroll costs
Slide 23: Forgiveness – Items to Consider
©2020 CliftonLarsonAllen LLP Forgiveness – Items to Consider Lowest of the three amounts calculated below #1 How much did the entity spend #5. Was enough of that spending on #4. What was the PPP loan amount? on allowable costs? payroll? (40% limit on non-payroll) (line 9) (lines 1 -4) (line 10) #2.
Slide 24: Resources
©2020 CliftonLarsonAllen LLP Resources • Treasury Website – https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses • SBA Website – https://www.sba.gov/funding-programs/loans/coronavirus-relief-options • CLA’s COVID Relief Center Bi-weekly Livestreams https://www.claconnect.com
Slide 25: CLAconnect.com
©2020 CliftonLarsonAllen LLP CLAconnect.com Presented by Jack Rybicki, Managing Principal [email protected] (813) 384-2701