PPP Loan Forgiveness A deep dive into the

PPP Loan Forgiveness A deep dive into the forgiveness calculation for the Paycheck Protection Program. May 8, 2020

• Founded in 1997 by Alan R. Sasserath, CPA, MS and Gregory Zoraian, CPA • Accounting, tax and business advisory services to corporations, small businesses and individuals in Long Island, across the country, and around the world. • Tailored services to meet client specific needs. • Specialty areas include: • • • Financial Services International Tax Technology Companies Construction Service Industries About Us Our Long Island CPA firm believes that clients’ success determines our own. So we ensure both by collaborating with our clients to achieve their goals. TREY research 2

Alan started his career in the audit department of Ernst & Young prior to working in the tax departments of two large regional firms. In 1996, Alan started his own practice and subsequently joined with Gregory Zoraian in January 1997 to form Sasserath & Zoraian, LLP. He has 30 plus years of public accounting firm experience with a broad background in accounting, tax, audit and financial planning. Alan's technical experience includes working with high net worth individuals and closely held businesses, dealing with matters related to both domestic and international tax. His industry experience includes technology companies, real estate management companies, construction, printing as well as numerous service industries. Alan. R. Sasserath, CPA, MS Partner – Sasserath & Zoraian LLP TREY research 3

Paycheck Protection Program Process • Obtain loan • Incur and pay forgivable expenses for 8 weeks • Calculate forgivable amount • Limit allowable non-payroll costs to 25% • Calculate reduction based on full-time equivalent reduction • Calculate reduction based on payroll reduction to employees that earn less than $100 K • Subsequent to 8 weeks – Apply to your bank for loan forgiveness • Bank has 60 days to finalize forgiveness amount • If a balance remains, it is paid back in 2 years at an interest rate of 1%. TREY research 4

What is Forgivable? • Payroll costs - Compensation to employees including salary, wages, commissions or similar compensation, including: • Cash, tips or the equivalent limited to $100 K • Payment for leave • Allowance for separation or dismissal • Group health care coverage • Retirement contributions • Payment of state and local taxes assessed on the compensation of employees. • Interest on debt • For mortgages and debt obligations in effect prior to 2/15/2020 • Rent under a leasing agreement • For agreements in effect prior to 2/15/2020 • Utilities • Includes payment for electricity, gas, water, transportation, telephone, or internet access. • Service must have been established prior to 2/15/2020 • Any EIDL to be refinanced • Refinance is at the discretion of the borrower TREY research 5

% of Payroll. Rule- Overview • 75% of funds from the PPP Loan are to be used for payroll costs. • Therefore, only 25% of the PPP Loan funds can be used for non-payroll costs. • If excess of non-payroll costs over 25%, the maximum forgivable non-payroll costs will be reduced to 25% of forgivable amount. TREY research 6

Full-time. Equivalent(“FTE”) Analysis-Overview • • • Comparison of the average number of FTE’s (as defined below) during the 8 -week period subsequent to receiving the loan (the “Covered Period”) to a Base Period • If average monthly FTE’s in the Covered Period is less than the average monthly FTE’s in the Base Period, then the maximum forgivable amount will be reduced. • FTE – Full-time equivalent employee, or a person working 30 hours per week or 130 hours per month. Base Periods that can be used: • If not seasonal - February 15, 2019 to June 30, 2019 OR January 1, 2020 to February 29, 2020 • If seasonal – use February 15, 2019 to June 30, 2019 FTE reduction will not reduce maximum forgivable amount if employee is offered their position back under certain circumstances or reduction is eliminated by June 30, 2020. TREY research 7

Payroll. Reduction-Overview • Payroll reduction of more than 25% during the Covered Period will reduce the maximum forgivable base. • Employees making an annualized equivalent of over $100 K are not included in this calculation. • Comparison is first full quarter prior to the Covered Period, or the first full quarter of 2020. • Maximum forgivable amount is not reduced if the payroll reduction is restored by June 30, 2020, or the employee is offered their position back under certain circumstances. TREY research 8

Maximum Amount Forgivable • Maximum amount forgivable is the smaller of: • The amount of the PPP Loan • The allowed expenses incurred and paid during the 8 -week loan period • Note – The PPP loan that was received may not all be forgiven, even if you keep your headcount and salary levels intact!! TREY research 9

PPP Forgiveness Tool A discussion on the forgiveness calculation tool. TREY research 10

Paycheck Protection Program – Current Events • If an employer laid an employee off, offers to rehire the same employee, but the employee declines the offer, then the forgiveness amount will not be reduced because of this employee. • Borrowers have until May 14, 2020 to return PPP loan proceeds under the safe harbor if they don’t meet the SBA guidance related to the following statement: • “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant. ” • Last Thursday, the IRS issued Notice 2020 -32 indicating that forgivable expenses paid with PPP loan proceeds are not tax deductible. There is a bipartisan bill in the Senate to reverse the effects of this Notice. TREY research 11

Questions? ? TREY research 12

Thank You Alan Sasserath 631 -368 -3110 alan@sz-cpas. com Sasserath & Zoraian LLP TREY research 13

This Power. Point presentation is provided by Sasserath & Zoraian, LLP and is intended solely for general informational and educational purposes. It is not intended in any way as financial, securities, insurance, tax or legal advice or services, or as a solicitation for any financial, securities, insurance, tax or legal product or service. Please consult with your financial, securities, insurance, tax and/or legal advisors for advice regarding your specific circumstances. The calculations herein are estimates based on our interpretation of the bill signed into law on March 27, 2020 under the CARES Act. TREY research 14