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Newburg Update for 5/21/2020 – Potential PPP Flexibility Might Be on the Horizon

May 22, 2020 Comments Off on Newburg Update for 5/21/2020 – Potential PPP Flexibility Might Be on the Horizon

The House is looking to put to vote a stand-alone bill entitled the Paycheck Protection Program Flexibility Act. There appears to be early bipartisan support for the bill within the Senate and among the President’s administration.

Some of the proposed changes include the following:

  • Ease or eliminate restrictions on limiting “non-payroll expenses” to 25% of loan proceeds
  • Expand forgiveness beyond the current eight-week spend period
  • Expand loan terms beyond the current two-year time-frame
  • Changes to the rehiring deadline to offset the impact of enhanced Unemployment Insurance
  • Allow for payroll tax deferment in tandem with taking PPP loans

Voting on the proposed bill is expected to commence next week.

We continue to monitor these important changes on a daily basis and will keep you informed.

See below for a direct link to the PPP Loan Forgiveness Application



Visit our COVID-19 page for more information:


Newburg Update for 5/18/2020 – SBA Releases PPP Loan Forgiveness Application – Impact and Updates

May 18, 2020 Comments Off on Newburg Update for 5/18/2020 – SBA Releases PPP Loan Forgiveness Application – Impact and Updates

The long overdue PPP Forgiveness Application was released by the SBA on May 15, 2020, providing some much needed clarification for small businesses in calculating their potential forgiveness amount.

Further PPP changes could be on the horizon in attempting to provide loan recipients with more time and flexibility to use the funds as reported within a Wall Street Journal article this weekend, which you can access here and also covered under the potential HEROES Act bill recently passed by the House on May 15th.

In the interim, we have detailed below some updated guidance released as part of the new PPP Forgiveness Application as the clarifications will in all likelihood impact  your previous forgiveness calculation estimates.  See below for the full application pdf link.

Payroll Cost and Payroll Period Clarifications:

  • Payroll costs paid and payroll costs incurred during the eight-week (56-day) “Covered Period” or “Alternative Payroll Covered Period” are now eligible for forgiveness.
  • Payroll costs incurred but not paid during the Borrower’s last pay period of the “Covered Period” or “Alternative Payroll Covered Period” are eligible for forgiveness if paid on or before the next regular payroll date.
    • “Covered Period” – Eight-week (56-day). The first day of the Covered Period must be the same as the PPP Loan Disbursement Date. For example: if the Borrower received its PPP loan proceeds on Monday, April 20, the first day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, June 14.
    • “Alternative Payroll Covered Period” – Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”). For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20. Borrowers who elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered Period wherever there is a reference in this application to “the Covered Period or the Alternative Payroll Covered Period.”

The maximum payroll cost for an individual employee in the Covered Period is $15,385 (Annual salary capped at $100,000, as prorated for the covered period).

The maximum amounts paid to any owner-employee or self-employed individual/general partner does not exceed eight weeks’ worth of 2019 compensation, capped at $15,385 per individual.

Eligible “Non-payroll”Costs: 

  • An eligible non-payroll cost (rent, utilities, and interest) must be paid during the “Covered Period” or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the “Covered Period”.
  • Eligible non-payroll costs cannot exceed 25% of the total forgiveness amount. Count non-payroll costs that were both paid and incurred only once.

Clarification to Full-Time Equivalent (FTE) Definitions:

  • 40 hours must be utilized to determine FTE. With no guidance to utilize previously,  many assumed it was based off ACA definitions at 30 hours.

Salary/Hourly Wage Reduction Calculation Changes:

  • As previously detailed, the amount of your forgiveness can be impacted for those employees whose salaries or hourly wages were reduced by more than 25%. New, however, is that the comparison period to calculate the potential reduction is now based off of the average payroll from January 1, 2020 to March 31, 2020.

FTE Reduction Safe Harbor Clarification:

A safe harbor under applicable law and regulation exempts certain borrowers from the loan forgiveness reduction based on FTE employee levels. Specifically, the Borrower is exempt from the reduction in loan forgiveness based on FTE employees described above if both of the following conditions are met:

  • The Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and
  • The Borrower then restored its FTE employee levels by not later than June 30, 2020 to its FTE employee levels in the Borrower’s pay period that included February 15, 2020.

We continue to monitor these important changes on a daily basis and will keep you informed.

See below for a direct link to the PPP Loan Forgiveness Application



Visit our COVID-19 page for more information:


Newburg Update for 5/14/2020 – PPP & EIDL SBA Loan Updates

May 14, 2020 Comments Off on Newburg Update for 5/14/2020 – PPP & EIDL SBA Loan Updates

PPP- Tracking Your Payroll Costs and Eligible Expenses

Timing of your payroll. Depending on your payroll schedule, you may want to adjust the timing of your payroll date to accommodate as many payroll cycles where possible. For example, if your PPP loan gets deposited in your bank account on April 27, you could use the funds only on expenses incurred during the eight weeks following April 27 (i.e. next payroll run should include the payroll period beginning April 27 and the last payroll run should include the payroll period end date of June 21, with a paycheck date of June 21). Those companies on monthly payroll should strongly consider increasing the frequency of their employees’ pay to best capture the eight week spend. One of the areas within the PPP revolves around this issue of incurred vs. actually paid and the submission/support requirements are not 100% clear.

Consider a new bank account approach. While there is no explicit requirement to set-up a separate bank account, it has been recommended and many businesses often prefer to keep their tracking most accurate. Having a separate account makes the process easier to support in that you know exactly your spend and what is left over after the 8 week spend period. You can transfer the funds into your checking/operating account and/or payroll accounts as you spend the funds. Important to earmark and maintain support for each transfer.

For example, using the dates from the above, you can transfer the funds from the PPP account to the operating account to cover the payroll that was run following 4/27.  It is not worth changing the account on file with the payroll company for the ACH debits to a new account for the 8 weeks.  We suggest planning with the payroll company to change the frequency of the pay date/period if needed to get the 8 weeks covered as incurred.  If for some reason you are coming close to the final 8 weeks and need more payroll coverage to meet the 75% there should be some flexibility on working with the payroll company. While back-pay is not allowed, you can consider bonuses earned during the period as well.

Develop a tracking plan and consider the following :

  • Each pay period transfer, the net calculated amount after you remove any salary and wages in excess of $100,000, paid to each employee of the payroll from the PPP account into the operating account. The gross payroll is then taken by your payroll provider out of the operating account. The maximum allowable weekly salary per individual during the 8 week period is $1,923 (including owners). Note: The Salary for the entire eight week period is a maximum of $15,385 per individual ($100K times 8 weeks over 52 weeks in a year).
  • Note that health insurance premiums, employer retirement benefit payments, and employer state taxes while included in “payroll costs”, are not subject to the $100,000 limit. Each month transfer (or pay directly) the exact amount of health insurance premiums for all employees and company owners (employer contributions). You may want to consider using the PPP funds to cover 100% of the health insurance premiums during the 8 week period.  Note, long term disability and life insurance benefits are NOT included in the “payroll costs” definition. Prepaying future coverage periods is also not eligible.
  • Each month either pay directly or transfer the exact amount of utilities, rents/leases, or interest on debt applicable for the eight week period (make sure these permitted non-payroll costs do not exceed 25% of your spend). Note also that any interest or rent payments may only be on agreements in place as of February 15th.
  • Only use the PPP account for these PPP related expenses during the eight week spend.
  • Maintain support for each expenditure within the PPP account.
  • Consult your payroll advisor as they may have additional tracking resources for you within their software.

Loan Forgiveness Amount of the PPP

While final regulations have not been issued and forgiveness details could change, the current provisions state, to maximize forgiveness, you must use at least 75% of the eight-week spend on ‘payroll costs’. The remaining spend can go to specified ‘non-payroll’ costs which include debt interest, rent and utilities.

It is important to note that the PPP is primarily meant to help employers pay their employees throughout the 8-week period after receiving the loan. The intention of Congress in creating the PPP was to keep U.S. workers employed. For that reason, small business owners should make an effort to meet the 75% threshold, particularly if their goal is to maximize forgiveness.

Good-Faith Certification

It should be noted that on May 13, 2020 the SBA provided an update via FAQs #46 which addresses how the SBA will review borrowers’ required good-faith certification concerning the necessity of their loan request. Click here https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf and scroll to the bottom at #46 for full details.

The clarification essentially notes that PPP loans over $2 million will be subject to certification/audit. The SBA does not formally define or provide further benchmarks for what makes the PPP loan request necessary to support a Company’s ongoing operations. Further, it appears their audits will be based on the particular facts and circumstances specific to each borrower.

There is a New Exemption on Re-hiring Employees

This newer item of clarity could greatly improve your FTE count and help you maximize forgiveness. Employees who were laid off or put on furlough may not wish to be rehired onto payroll. If the employee rejects your re-employment offer, you may be allowed to exclude this employee when calculating forgiveness. To qualify for this exemption:

  • You must have made a written offer to rehire in good faith
  • You must have offered to rehire for the same salary/wage and number of hours as before they were laid off
  • You must have documentation of the employee’s rejection of the offer

Note that employees who reject offers for re-employment may no longer be eligible for continued unemployment benefits.

Rehiring Grace Period

While the amount of potential forgiveness is initially reduced by your average FTE headcount during the eight-week spend, there is a second “cure-all” or grace period if fully restored by June 30, 2020.Business owners can rehire any staff that were laid off, put on furlough, or brand new hires to restore FTE headcount and reinstate any compensation deficiencies that were decreased by more than 25% to meet the requirements for forgiveness. You have until June 30th to do so. If your eight-week forgiveness period ends before June 30, we believe you can still use the grace period if you reinstate headcount and/or wage level. Just be sure to apply for forgiveness after June 30. We anticipate final guidance to include further clarity regarding this provision within the PPP.

PPP vs. EIDL Loans – Expenditures & Forgiveness

The two biggest stimulus programs for small businesses are the SBA’s Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL). While the PPP program exhausted funds quickly and is now in its second round of funds, the EIDL program has been very slow to rollout. Many businesses who applied for the EIDL (directly with the SBA) may have forgotten about it as it feels like such a long time ago.  Hopefully that is changing as we have seen over the last week a considerable increase of clients receiving the EIDL loan terms. Last week, the SBA announced that EIDL loans will be capped at $150,000 and all new applications will only be accepted for ‘agricultural’ businesses.

PPP vs. EIDL Loans and Expenditures

Question: Can a business utilize funding from both loans?

Answer: Yes. Both can be utilized but not for the same costs. The application period for PPP loans runs through June 30, 2020, but the EIDL application period runs through December 2020.

You Cannot Use Funds From Both Loans for the Same Purposes

For example, you cannot use both EIDL and PPP towards “payroll”. As long as you do not use the EIDL for payroll costs, your PPP eligibility will not be affected. If the EIDL is used for payroll costs, your PPP amount will have to be used to refinance the EIDL. We recommend the EIDL loan be used for other working capital expenditures. Avoid using the EIDL for payroll costs, rent, utilities, and interest on debt payments.

Your EIDL Advance Grant Will be Deducted from the Loan Forgiveness Amount of the PPP

The EIDL allows small business owners to request an advance grant of up to $10,000. As an advance grant, it will not have to be paid back. However, if you receive an EIDL advance and a PPP loan, proceeds from the advance will be deducted from the loan forgiveness amount.

To illustrate, for example ABC Company gets a $25,000 PPP loan, then later receives a $5,000 EIDL advance. The amount of the advance would be deducted from the forgivable amount of the PPP loan. So even if the company follows all of the loan forgiveness rules, the most that can be forgiven is $20,000.

Visit our COVID-19 page for more information:


Contact us directly at info@newburg.com should you have any further questions.


Newburg Update for 5/12/2020 – Deadline for Submitting Direct Deposit Information for Your Stimulus Payment is TOMORROW at 12 PM

May 12, 2020 Comments Off on Newburg Update for 5/12/2020 – Deadline for Submitting Direct Deposit Information for Your Stimulus Payment is TOMORROW at 12 PM

Tomorrow, Wednesday, May 12th at 12:00 PM EST, marks the deadline for taxpayers to provide their banking information to the IRS, in order to receive their stimulus payment via direct deposit, instead of a check.

Roughly $200 billion has already been paid to 130 million people by the IRS, as of last week, meaning approximately 20 million Americans have still yet to receive theirs.

The IRS may not have your banking information for several reasons. If you have not previously filed a tax return, you owed money previously versus receiving a refund, you opted to receive your refund via check or if you have changed banks (or accounts). 

Some stimulus payments have already been sent via check to some recipients, but fulfilling the remainder of the check based payments could take until July to complete.

If you have not provided your direct deposit information and wish to do so before tomorrow’s deadline, you can follow this link: 


Visit our COVID-19 page for more information:


 Contact us directly at info@newburg.com should you have any further questions.


There is Still Time to Make a Deductible IRA Contribution for 2019

May 12, 2020 Comments Off on There is Still Time to Make a Deductible IRA Contribution for 2019

Do you want to save more for retirement on a tax-favored basis? If so, and if you qualify, you can make a deductible traditional IRA contribution for the 2019 tax year between now and the extended tax filing deadline and claim the write-off on your 2019 return. Or you can contribute to a Roth IRA and avoid paying taxes on future withdrawals.

You can potentially make a contribution of up to $6,000 (or $7,000 if you were age 50 or older as of December 31, 2019). If you’re married, your spouse can potentially do the same, thereby doubling your tax benefits.

The deadline for 2019 traditional and Roth contributions for most taxpayers would have been April 15, 2020. However, because of the novel coronavirus (COVID-19) pandemic, the IRS extended the deadline to file 2019 tax returns and make 2019 IRA contributions until July 15, 2020.

Of course, there are some ground rules. You must have enough 2019 earned income (from jobs, self-employment, etc.) to equal or exceed your IRA contributions for the tax year. If you’re married, either spouse can provide the necessary earned income.

Also, deductible IRA contributions are reduced or eliminated if last year’s modified adjusted gross income (MAGI) is too high.

Two contribution types

If you haven’t already maxed out your 2019 IRA contribution limit, consider making one of these three types of contributions by the deadline:

  1. Deductible traditional. With traditional IRAs, account growth is tax-deferred and distributions are subject to income tax. If you and your spouse don’t participate in an employer-sponsored plan such as a 401(k), the contribution is fully deductible on your 2019 tax return. If you or your spouse do participate in an employer-sponsored plan, your deduction is subject to the following MAGI phaseout:
  • For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
    • For a spouse who participated in 2019: $103,000–$123,000.
    • For a spouse who didn’t participate in 2019: $193,000-$203,000.
  • For single and head-of-household taxpayers participating in an employer-sponsored plan: $64,000–$74,000.

Taxpayers with MAGIs within the applicable range can deduct a partial contribution. But those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.

  1. Roth. Roth IRA contributions aren’t deductible, but qualified distributions — including growth — are tax-free, if you satisfy certain requirements.

Your ability to contribute, however, is subject to a MAGI-based phaseout:

  • For married taxpayers filing jointly: $193,000–$203,000.
  • For single and head-of-household taxpayers: $122,000–$137,000.

You can make a partial contribution if your 2019 MAGI is within the applicable range, but no contribution if it exceeds the top of the range.

  1. Nondeductible traditional. If your income is too high for you to fully benefit from a deductible traditional or a Roth contribution, you may benefit from a nondeductible contribution to a traditional IRA. The account can still grow tax-deferred, and when you take qualified distributions, you’ll only be taxed on the growth.

Act soon

Because of the extended deadline, you still have time to make traditional and Roth IRA contributions for 2019 (and you can also contribute for 2020). This is a powerful way to save for retirement on a tax-advantaged basis. Contact us to learn more

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