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NEXT STEPS Next Town Hall Tuesday, April 28

01Visit COVID-19 section of website for additional insight and information

02Reach out to us via website “Contact” page

03

QUESTIONBUCKETS

WORKFORCE

TECHNOLOGY

REGULATORY

CASH FLOW

HUMAN RESOURCES

AGENDA

INTRODUCTION

COVID-19 UPDATE REGULATORY WORKFORCE CASH FLOW PPP

HILLMANN CONSULTING – COVID-19 FACILITIES

COVID-19 ROUND TABLE: THE NEXT 30-60 DAYS

Q&A PORTION

INTRODUCTION

TOM MOUL, CPA

COVID-19 UPDATE:REGULATORY

TOM MOUL, CPA

COVID-19 UPDATE:WORKFORCE

KRISTI WEIERBACH, Ph.D., SPHR, SHRM-SCP

COVID-19 UPDATE:CASH FLOW

STEVE SNYDER, CPA, CCIFP

COVID-19 UPDATE:PPP

CHAD BUMBAUGH, CPA

DISCLAIMER

This presentation is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although we have made every effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this presentation. Some of those modifications may be significant. As such, be aware that this not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to your or your business with respect to the matters addressed.

PPP LOANS FORGIVENESS: OVERVIEW

Potential for up to 100% Loan Forgiveness (including accrued interest) Determined based on how PPP funds spent during 8-week covered

period Expenses must be incurred and paid during the 8-week period to be

eligible for forgiveness *

8-week covered period begins upon date PPP funds received Forgiveness subject to various determinants that are measured

throughout 8-week covered period Lenders will ultimately make forgiveness determination

* - CARES act Section 1106 Loan Forgiveness items (b)

PPP LOANS FORGIVENESS: OVERVIEWCONTINUED

Covered Expenses* U.S. based cash employee compensation up to $100k (ex. wages,

salaries, commissions, bonuses, as well as leave time - vacation, medical, parental, sick**, etc.) Group Healthcare (including self-insurance) & Retirement benefits Employer paid State & Local payroll taxes on compensation Rent – if lease or agreement in place before February 15, 2020

Related party rentals are not specifically disallowed but rent agreements prior to February 15, 2020 required

Utilities – if service in place before February 15, 2020 CARES act defined as: Electricity, gas, water, transportation (?), telephone,

internet. Transportation utility = fuel for business vehicles?

Mortgage and other Interest – for debt in existence before February 15, 2020 Although there is some debate about conflicting wording in guidance it

appears intent is to allow interest on any debts in place February 15, 2020 (not just those secured by a mortgage)

* - Interim final rule item 2(r) - How can PPP loans be used? ** - unless claiming a credit under Families First Coronavirus Response Act (FFCRA)

PPP LOAN FORGIVENESS:DETERMINANTS

75% Payroll Costs / 25% Other Costs Usage Requirement *

FTE Requirements during 8-week covered period ** Forgiveness is reduced if you decrease full-time equivalent

headcount during covered period FTE believed to be defined as employee working > 30 hours (“ACA

method” *** with a twist – measured per pay period as opposed to per month – not yet definitively defined in context of CARES act)

Compensation Requirement during 8-week covered period ** Compensation cannot be reduced by more than 25% per employee

during covered period compared to the most recent full quarter during which employee was employed prior to covered period Only applies to employees under $100k wage cap

* - Interim final rule item 2(o) - Can my PPP loan be forgiven in whole or in part?

** - CARES act Section 1106 Loan Forgiveness items (d)(2) and (d)(3)

*** - ACA method detail in IRC Section 4980H

PPP LOANS FORGIVENESS: DETERMINANTSCONTINUED

June 30th “restoration” – grace period for FTE & compensation requirements during 8-week covered period * Loan forgiveness determined “without regard to reduction in

number of full-time equivalent employees of an eligible recipient or a reduction in salary of employees during the period beginning on February 15, 2020 through April 26, 2020 (30 days after enactment of CARES Act in original text)” if, by June 30th, the employer has eliminated the reduction in the number of FTE’s or wages of such employees.

* - CARES act Section 1106 Loan Forgiveness items (d)(5)

ORDERING OF PPP LOAN FORGIVENESS MECHANICS

Some debate about “ordering” of Determinants of Forgiveness

Our opinion is that ordering of determinants is as follows:

1. 75% / 25% rule – to determine maximum possible forgiveness2. June 30th Restoration – have FTE & Salary reductions been

mitigated? 3. 8-week covered period FTE & Salary limitations

PPP LOAN FORGIVENESS MECHANICSCONTINUED

75% / 25% At least 75% of the loan forgiveness amount must be spent on

payroll costs *

PPP LOAN FORGIVENESS MECHANICSCONTINUED

FTE’S & JUNE 30TH GRACE PERIOD

FTE reductions mitigated? Much to consider here in terms of how to staff business Who & how brought back matters!

1. Employee working 30 hours counts as one for FTE reduction purposes 2. Employee working either 40 or even 60 hours will still only count as one for

FTE reduction purposes – no “credit” for additional hours (although additional compensation would likely reduce any limitation based on salary)

3. Two employees working 30 hours each are more favorable for FTE reduction purposes even if compensation paid, in total, is the same as the one individual working 60 hours.

4. Four Part-Time employees working 15 hours each (same 60 hours) count as 2 FTE’s

5. One employee working 10 hours per week = 0.33 FTE (10/30 hours)

Importance of scheduling (already vital in many industries) just ramped up significantly.

Choices around FTE measurement periods and seasonal business considerations

Numerous unknowns remain - Can I hire family members? Temps? What about rehires new/modified positions? What about replacements for employees who left the organization?

PPP LOAN FORGIVENESS MECHANICSCONTINUED

FTE’S & JUNE 30TH GRACE PERIOD

BASIC EXAMPLE

PPP LOAN FORGIVENESS MECHANICSCONTINUED

SALARY & JUNE 30TH

GRACE PERIOD

Salary Reductions Mitigated? Important to note this calculation is employee specificOnly applies to employees under $100k annualized

compensation cap As written guidance is comparing a quarter (roughly 12-

week period) to 8-week forgiveness period – inherent reduction > 25% if pay not increased Seen as flaw in the guidance which hopefully will be corrected

Key thresholds:

PPP LOAN FORGIVENESS MECHANICSCONTINUED

WAGES & JUNE 30TH GRACE PERIOD

BASIC EXAMPLE

PPP LOAN FORGIVENESS MECHANICSCONTINUED

SALARY & JUNE 30TH

GRACE PERIOD

WHAT ABOUT BONUSES?

Under current guidance can pay bonuses and have these count toward meeting payroll requirements Bonuses can’t exceed $100,000 annualized in

determining forgiveness

PPP LOAN FORGIVENESS:FINAL TALLY

TIPS FOR PREPARING FOR FORGIVENESS

Schedule personnel with intentionality

Calculate FTE’s for the applicable periods – do what you can now

Work on forgiveness modeling –early & often; particularly FTE’s We can help!

Look at how timing of payrolls fall – adjustment needed?

Gather documentation to support forgiveness calculation

Plan for potential repayment if not fully forgiven Repay after forgiveness determination or take the 1% / two-year

loan?

FORGIVENESSMEASUREMENTMECHANICS

Lenders will have 60 days once information provided to determine forgiveness

Remaining balance will convert to 2-year term loan / 1% interest Payments on PPP loan are deferred for 6 months (interest continues

to accrue during deferral period)

Lenders may differ in their request for information / interpretations of guidance even after final regulations on forgiveness issued – discussions with lenders throughout process highly encouraged! We are seeing lenders ask for bank statements of the account PPP

funds deposited into to view activity

SUBJECT TO CHANGE!

Final word of caution – the items discussed in this presentation are pending Treasury’s further guidance on forgiveness which is anticipated any day.

HILLMANN CONSULTING -FACILITIES

CHRIS BAKER, HILLMANN CONSULTING

COVID-19 ROUND TABLE

THE NEXT 30 DAYS

OPERATIONS/FACILITIES

CASH FLOW/FINANCE

CLIENT/SUPPLIER

PERSONNEL

QUESTION & ANSWER

THANK YOU FOR JOINING

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SEE YOU NEXT WEEK:

APRIL 28, 2020 @ 2:00pm – 4:00pm