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U.S. Department of the Treasury building in Washington, D.C.

Focus on payroll for loan forgiveness, experts say

The most attractive aspect of the Paycheck Protection Program — the potential for up to 100 percent loan forgiveness — is still shrouded in a daunting combination of governmental vagueness and public confusion. With the program receiving a second influx of cash, the Home Furnishings Association hosted a live COVID-19 Webinar Tuesday to help clarify with members and other furniture retailers how that loan forgiveness can be secured.

HFA Executive Vice President Mark Schumacher spoke with HFA lobbyist Chris Andresen and Sidley Austin attorney Michael Borden in hopes of clearing up some of the retailers’ many questions.

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

Cover payroll

Use most of your federal relief on payroll — at least 75 percent. “This is the big one,” said Borden. “The government is going to want to see that you are keeping your employees on the payroll and protecting them.”

Just not too much payroll

When paying your high-commission sales staff or managers, be careful not to pay them more than $3,846 per two-week pay period. If you do, Borden said you should be aware that any amount over an annualized $100,000 per year will not count toward forgiveness. Borden said the Small Business Administration is still working out details to this and other parts of the loan forgiveness, 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 during an eight-week window that begins when the loan originates, or is deposited into your bank account. Andresen said retailers must make sure their pay periods fall within the 56-day window. “You need to be flexible with your payroll, but make sure everything falls within that eight-week window,” Andresen said. Loan funds spent after eight weeks won’t qualify for forgiveness.

Even though terms about documenting how you spend your loan money have not been worked out, Borden said it shouldn’t be too complicated. “This program was designed for small businesses who are not used to sophisticated record-keeping or accountants, but that doesn’t mean you can get lazy,” he said. “Keep your receipts. You need to show your bank where the money went, whether that’s for payroll, rent or utilities.”

More relief may be coming

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

The distress of the airline, restaurant and hotel industries has been widely recognized. Borden said the retail industry must speak up, too. “Every sector needs to have their voice heard,” he said. “If you don’t, you’ll be left behind. If you don’t ask as a group, they will think everything is fine.”

As always, the HFA will continue to advocate for its members.

Thursday webinar: Todd Wanek

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

All  HFA webinars can be found online at the HFA’s COVID-19 Recovery Resources page.

[PPP Loan Forgiveness FAQs]

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