COVID-19 RELIEF FAQs

Employee Paid Leave Options
We are answering these questions based on guidance from the IRS Paid Leave FAQs, FFCRA FAQs, and our patners. ALL information is subject to change or be updated, and should not be viewed as legal advice. Please consult your attorney, advisor, or lender as you navigate your options.

• Are nonprofits eligible? How is the tax credit applied to nonprofits?
  • Yes, nonprofits are eligible. The tax credits are payroll tax credits, which nonprofits will be able to utilize.
  • This act applies to public and private employers with fewer than 500 employees, with a certain exception – small businesses with fewer than 50 employees may qualify for exemption, but the standard for granting exception is very high.

• What are qualifying reasons I would need to pay leave?
  • An employee qualifies for paid sick time if the employee is unable to work or unable to telework due to a need for leave because the employee:

1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
2. has been advised by a health care provider to self-quarantine related to COVID-19;
3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
4. is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
5. is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
6. is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

• What documentation do I need to receive FFCRA tax credit?
  • Name and relation of individual for whom the employee is caring.
  • Name of school, place of care, or care provider that is unavailable due to COVID-19.
  • Employee’s representation that no other person will provide care for the child.
  • Employee must also provide a statement documentation of “special circumstances” requiring the employee to provide care for a child older than age 14 (or those older than 18).

• Can I require my employees utilize their own PTO or sick leave before using Emergency Family and Medical Leave?
  • No

For information on accessing the tax credits after offering required paid leave, please consult this IRS guide.

Unemployment Insurance Under recent acts, there is expanded help for unemployment insurance. The federal government is allowing new options for states to amend their laws to provide unemployment insurance benefits related to COVID-19.  Currently in Montana, if you are told to leave work due to sickness, or are not employed in an essential industry and are told not to report, you qualify for state Unemployment Insurance.

• State FAQ’s for Organizations
• State FAQ’s for Employees
• If I lay off my employees due to COVID-19, will they be considered job attached?
  • Your employees may be considered job attached. Advise them to select the Job Attached option when filing or reactivating their UI claim.
• Are employees eligible for benefits if their hours are reduced?
  • If an employee is working less than their customary hours, they may be eligible to receive partial benefits.
• How do my employees file for benefits and how much do they get?
  • Employees may file for UI benefits online at MontanaWorks.gov. Use the benefits estimator to calculate a possible weekly benefit amount. Please do not call the state COVID-19 hotline for UI questions.
• How will this affect my UI Tax rate? Will the benefit charges be relieved?
  • Under the emergency rules that went into effect March 17, 2020, employers will not be charged on a COVID-19 claim.
• Does Section 2103 of the CARES Act that provides for a 50% reimbursement if certain benefits paid under the Act to former employees of direct reimbursable employers require the State of Montana to collect the other 50% of the reimbursement from those employers?
  • Per the Montana Department of Labor (4/13/2020) - No. Federal funding of unemployment insurance programs establishes a base line for a state’s operation of its Unemployment Insurance provisions, which the state is free to supplement with whatever funding it deems appropriate. Section 2103 (a) of the CARES Act (P.L. 116-136) provides flexibility for states regarding reimbursable employers to make timely payments under state laws. Section 2103 (b) amends Section 903 of the Social Security Act (42 USC 1103) by providing for a transfer of funds from the federal Unemployment Trust Fund to the states equal to one half of the amounts paid for unemployment compensation paid between March 13, 2020, and December 31, 2020, with respect to reimbursable employers. However, for Montana reimbursable employers, temporary emergency UI rule II (8) (filed March 17, 2020), provides that an employer is relieved of charges arising from a COVID-19 layoff and paid under the emergency rules. The fact that section 2103 of the CARES Act provides for partial federal reimbursement for unemployment compensation related to reimbursable employers paid during the COVID-19 pandemic does not limit the State of Montana from providing that employers will be relieved of all charges for benefits paid under the COVID-19 pandemic. New Rule II establishes claims paid under the emergency rules are not specifically chargeable to the employer.

Additional programs are available or may be available for those seeking unemployment. We will update FAQs as more information becomes available.

THE SBA HAS RESUMED ACCEPTING PPP APPLICATIONS UNTIL AUGUST 8TH

We encourage you to reach out to your lender ASAP as these funds are not anticipated to last long. Find helpful information for applying below.

• PPP Forgiveness Overview (watch)
• SBA Interim Final Rule for PPP Forgiveness
• PPP Loan Forgiveness Application - NEW
• SBA PPP Loan Review Guidance for Lenders
• SBA & Treasury Department FAQ
• PPP Loan Forgiveness Calculator
• How to calculate PPP loan amounts
• Montana Lenders Participating in the PPP Program

Paycheck Protection Program Loan

We are answering these questions based on guidance from the SBA Interim Final Rule, Paycheck Protection Program FAQs and guidance from our partners. ALL information is subject to change or be updated, and should not be viewed as legal advice. Please consult your attorney, advisor, or lender as you navigate your options.

• But first, the questions we don’t yet have complete answers to:
  • How do you answer the ownership question for nonprofits on the PPP? Consult with your lender
  • Are fiscally sponsored organizations eligible? Consult with your lender
  • Are 501c6 organizations eligible? Consult with your lender
  • How is partial forgiveness determined?
    • In depth guidance for your situation is most likely needed. Work with your lender, but the general rule is 60% or more of your expenses need to qualify as payroll expenses and the remaining 40% or less must be for mortgage interest, rent, and utilities for the loan to be forgivable. Two conditions impact the amount forgiveness may be reduced:
      • Reduction of people’s salaries.
      • Reductions in number of employees.

PPP Forgiveness

• Does the $100,000 cap on allowable compensation include benefits or just wages?
  • The SBA has clarified that the $100,000 limit on individual employee compensation used to calculate the maximum eligible loan size under the PPP only applies to “cash compensation,” e.g. salary and wages.  Benefits are allowable even if they push total compensation above $100,000.
• Does mileage reimbursement qualify as a forgivable transportation expense?
  • The CARES Act allows for transportation costs. The only SBA guidance we have as of now on this point is for self-employed individuals. This guidance states that gas used for driving a business vehicle is a forgivable use of PPP loan proceeds. This suggests gas expenses and expenses from the standard mileage allowance may be permitted, but we do not have definitive guidance from SBA on this point.
• Do retirement plan contributions qualify as a forgivable payroll expense?
  • Based on our interpretation, payments made to an employer sponsored retirement plan are eligible for forgiveness, limited to the amounts that are incurred during the 8-week covered period – not the whole year.

PPP Application

• Who is eligible?
  • 501 (c) (3) nonprofit organizations, 501 (c) (19) veterans’ organizations, and Tribal business described in section 31(b)(2) (c) that have fewer than 500 employees.
• What is forgivable under the PPP?
  • This can be up to the full principal amount of the loan and any accrued interest, if the borrower uses all the loan proceeds for forgivable purposes. Forgivable purposes include “payroll costs,” defined as:
    • If EIDL was used for payroll, your PPP must be used to refinance this grant. Up to $10,000 will be deducted from the loan forgiveness amount on the PPP loan.
    • Compensation to employees in the form of wages, salaries, commissions, or similar compensation.
    • Cash tips or equivalent.
    • Payment for vacation, parental, family, medical, or sick leave. However, this excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the FFCRA.
    • Allowance for separations or dismissal.
    • Payment for the provision of employee benefits consisting of group health care coverage including insurance premiums, and retirement.
    • Payment of state and local taxes assessed on compensation of employees.
    • For independent contractors or sole proprietors: wage, commissions, income, or net earnings from self-employment or similar compensation.
    • Other costs including mortgage interest, rent, and utilities. But these may not be more than 25% of the total amount

• What is not forgivable? A short list of specifically non-forgivable expenses is below, but is not all-encompassing:
  • Any compensation of employee whose principal place of residence is outside of the US.
  • Compensation of an individual employee in excess of an annual salary of $100,000 (prorates as necessary).
  • Federal employment taxes imposed or withheld between Feb 15, 2020 and June 30, 2020, including employee and employer’s share of FICA and Railroad Retirement Act taxes, and income taxes required to be withheld from employees.
  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

• My nonprofit is seasonal, and activity increases from April to June. Considering activity from that period would be a more accurate reflection of my business’s operations. However, we weren’t fully ramped up on February 15, 2020. Am I still eligible?
  • Consult with your lender. They may be able to consider whether a seasonal borrower was in operation on February 15, 2020 or for an 8-week period between February 15, 2019 and June 30, 2019.

• Can part-time employees be paid under PPP?
  • Yes, if they are on payroll.

• Can PPP be used for contractors?
  • No, but if your contractor is a sole proprietor or independent contractor, they are eligible to apply for their own.

• Do I need a lender to apply for a PPP Loan?
  • Yes, you apply through an approved SBA Lender. Many banks are approved lenders. Reach out to your current bank or lender to apply.
    • Lenders are not required to participate in the PPP program and can set their own guidelines and limits for participation. Please consult your local lender for their process for submitting a PPP application.

• What if I apply for the PPP and then an employee leaves for unrelated COVID-19 reasons?
  • Your forgiveness amount will decrease by any amount not used to cover payroll expenses. So, if an employee leaves after you have applied, you do not use that funding and it is not forgiven, you will pay it right back. If you use it for other purposes, you will have to pay it back according to the terms outlined in the loan agreement with your lender.

• Can I apply for both EIDL and PPP?
  • Yes, but you may not “double dip” to cover the same costs.

THIS FUND IS STILL AVAILABLE

Economic Injury Disaster Loan (EIDL) Program
We are answering these questions based on guidance from the SBA Interim Final Rule, and guidance from our partners. ALL information is subject to change or be updated, and should not be viewed as legal advice. Please consult your attorney, advisor, or lender as you navigate your options.

• What is the EIDL grant (or advance) and loan program?
  • The SBA Economic Injury Disaster Loan is a low interest loan available to nonprofits and businesses impacted by COVID-19. Application available here. It can be used to pay for expenses that could have been met had the disaster not occurred, including payroll and operating expenses. The majority of this loan, excluding the exception of the grant listed below, is not forgivable and will need to be paid back.
  • Through the same EIDL Loan application (linked above) you may apply for an EIDL grant (or advance), which does not need to be repaid under any circumstances. You may apply for $1,000 per employee, up to $10,000, and the loan is usually received within three days of completing the application.

• How does the EIDL Grant or Advance impact my PPP application?
  • If an organization is applying for a full EIDL loan and the advance and loan are being used for something different than the PPP, then that loan stands apart and is distinct from the PPP. If you only apply for the advance and not the full EIDL loan, the advance gets rolled into the PPP and the amount of the PPP gets reduced by the advance amount.