Even Banks Are Getting It Wrong
If we were to pick one word that described this time in history, I think we can all agree that “uncertainty” tops the list.
That said, we are here to answer your questions and clear up at least some of your uncertainties as they relate to the loan programs, tax credits, or assistance packages available to your business or your employees.
As we have worked with clients and banks, muddling our way through the thousands of pages of recent legislation, we are finding that even bankers are unclear about the terms of various assistance programs.
Here is an example that our tax partner, Julie Choi, brought to my attention.
One of our clients, an import wholesaler, contacted our firm to ask about the employee retention credit, which allows qualifying businesses to take a payroll tax credit of 50 percent of wages paid by employers to employees from March 13 through the end of 2020.
The tax credit cannot be used in conjunction with a PPP loan (or any other forgivable loan).
When Julie explained that the employee retention credit was the least attractive option for this client, whom Julie had previously advised to apply for a PPP loan, the client explained that his banker had told him that his company would not qualify for a PPP loan.
“The bank was including foreign and affiliated employees in the employee headcount, which put the client above the 500-employee limit,” said Julie. “But I was certain the bank was wrong in its calculations.”
Fortunately, our firm was able to provide the client with resources to provide the banker with the correct formula for counting employees—namely, we pointed the banker toward the guidelines that excluded foreign and affiliated employees from inclusion in employee headcount.
Using the accurate method, the client came in well under 500 employees and was a perfect candidate for the PPP loans.
With this correct information, the bank accepted the client’s application for a PPP loan the next day, and the client’s application was approved shortly thereafter.
“We have a dedicated team studying these programs inside and out so that we can be a resource,” said Julie. “Please reach out if you are receiving contradictory or confusing information.”
Julie has served along side Rose, Snyder & Jacobs, LLP for more than 20 years, in both, public and private accounting. She has developed the ability to diagnose and solve her clients’ most challenging problems with ease. She has extensive experience working with families and closely-held businesses and works diligently to provide answers and realistic solutions, understanding that every situation is different.