CARES Act Update Week of April 6, 2020

Nancy Bush, CFO Consultant, Kranz


Kranz receives frequent updates on the CARES Act and how businesses are responding to impacts of the COVID-19 through communications with our consultants, valued clients, partner banks, and legal and tax service providers. In our commitment to keeping you informed, we will be sharing this information on a regular basis. Check our blog here for current updates. Please contact us if you’re interested in a complimentary one hour CFO consultation on any of these issues.

CARES Act – What Just Happened?

Week of April 6, 2020

The CARES Act intended that SBA approved lenders begin providing Payroll Protection Program (PPP) loans as of April 3. Bank of America and JP Morgan Chase met this objective and other lenders began providing loans earlier this week. For the most part, lenders appear to be accepting applications only from their own current banking clients. Non-bank clients will be considered for loans once their client applications begin to diminish. As this is being written April 8, 3,200 banks have provided $70B of loans to over 250,000 businesses. Legislation requesting an increase in funding for PPP loans by $250B is expected to be approved by the House and Senate within the next week.


Interim final rule PPP Interim Final Rule released on April 3 by the Treasury in which several enhancements and clarifications were made to the application process as follows:

  • Payments to independent contractors are not considered payroll costs for the purpose of computing the average monthly payroll cost used to determine the maximum loan amount. Only compensation to employees should be taken into account. (Independent contractors are entitled under the Act to submit their own PPP loan application.)
  • 100% of the loan proceeds used in the eight-week period following the date of the loan are eligible for forgiveness however any amount of non-payroll costs (i.e. interest on mortgage obligations, rent/lease payments, utility payments) exceeding 25% of costs during the eight weeks will not be forgiven.
  • The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest.
  • The interest rate on the unforgiven portion (if any) will be 1%, with a maturity date of two years. This compares to it being a maximum of 4% and maximum maturity of 10 years in the original text of the bill.
  • The interim final rule mentions that the SBA intends to promptly issue additional guidance with regards to the applicability of affiliation rules. (A Wall Street Journal article April 4 references a representative from the VC/PE industry as saying there are 15,000 VC backed and 12,000 PE backed small business in the U.S., and that the affiliation waiver for these firms could be in place before April 11th.)
  • Electronic signatures and consents are allowed.


New PPP application form released by the Treasury on April 3rd: PPP Application Form (04032020) Changes between this version and the initial one include the following:

  • The specification of the applicant’s business status is expanded to include sole proprietor, independent contractor, partnership, C-Corp, and LLC.
  • Calculation of the loan amount now includes the addition of any EIDL loan less any advances made ($10,000). This is further clarified in the instructions by indicating that only EIDL loans made between January 31, 2020 and April 3, 2020 are to be included.
  • The request for number of jobs has been changed to number of employees.
  • The term “owner” has been changed to “applicant” throughout.
  • The question on whether the applicant is a U.S. citizen or lawful permanent resident has been removed.
  • A question has been added asking if the principal place of residence is the U.S. for all of the applicant’s employees included in the payroll calculation.
  • A question has been added asking if the applicant is a franchise listed in the SBA Franchise Directory.
  • Added is a certification by the applicant that they are eligible to receive a loan as eligibility is defined in the CARES Act.
  • Added is a certification by the applicant that they are an independent contractor, eligible self-employed individual or sole proprietor, or employs fewer than 500 people.
  • Added is a certification by the applicant that he/she was in operation on February 15, 2020 and had employees for whom they paid salaries and payroll taxes, or paid independent 1099 contractors.
  • A very detailed description is newly provided in the instructions (page 3 of the application instructions) with respect to what payroll related expenses can paid for from the loan.


Currently, Kranz is assisting many of our clients with strategic thinking about the various benefits contained in the CARES Act and analysis of their loan options. Banks are most likely to have their own online loan application forms mirroring the one issued by the Treasury April 3. PPP Loans will be accepted through June 30, 2020.


We recommend that Founders have a conversation with all board members to ensure agreement on filing of a PPP loan application. There has been some discussion around whether companies in industries other than retail, food service, and hospitality should be applying for these loans. In particular, companies with a strong balance sheet (due to a recent financing.) Recall that this loan will effectively be discoverable via a FOIA (Freedon of Information Act) request. The board should be considering media and public relations repercussions. Also, begin crafting a narrative around the “economic necessity” for this loan as it will become helpful at least to the loan forgiveness request after 60 days (eight weeks.)


Recently Received Questions

If you have an employee with a compensation of $200K and they join halfway through the year, should you include them?

Yes, based on the application form and SBA guidance, an annualized compensation for all employees should be included for payroll cost calculations. However, the maximum annual compensation you can use for any one employee is $100K.

Guidance on the payroll calculation was to use a salary cap of $100K versus the cost of $100K noted in the application. Which one should I use?

While this is still not 100% clear based on the various guidance and rules that have come out, the latest interim final rule from the Treasury suggests that the $100K cap applies to salaries/commissions only and does not cap benefits.

Under the Paycheck Protection Program there appears to be a $100k payroll cost limit. Is that intended to be a $100K cap per employee/contractor, or limit eligibility to only those employees/contractors under $100K in salary?

This is a $100K limit for each and every employee included in the calculation of average monthly payroll cost. Remember that independent contractors are not to be included in your calculation of average monthly payroll cost because they were given the opportunity to apply separately for a PPP.

Does the $100K cap per employee for PPP include all forms of compensation to the employee (wages, taxes, healthcare benefits etc.)?

The interim final rule from the Treasury suggests that the $100K cap applies to salaries/commissions only and does not cap benefits.

Does payroll costs for PPP include employer share of social security and Medicare?

Social security and Medicare comprise FICA taxes, which are excluded from payroll costs.


Recommended websites for additional information and guidance:

National Venture Capital Association (

U.S. Department of the Treasury (


Virtual Event 4.15.20: Transforming HR for Economic Stability and COVID-19 Best Practices

Please join us for a live Lunch & Learn conversation with our friends at TriNet to discuss best practices as it pertains to COVID19 from an HR perspective. It is Kranz’ goal to provide our clients with guidance on how to protect your business and employees through market uncertainty. Alicia Hotson and Allie Rogers, consultants at TriNet, will address the top of mind questions for small to mid-sized business, discuss implications for both start-ups and financial services firms, and provide expert resources available to you in real-time.

April 15, 2020

11:30 AM – 12:30 PM

Zoom Webinar

Register Now

Virtual Event 4.9.20: Embracing The New Norm: Establish & Optimize the Effectiveness of Virtual Accounting & Finance Teams

Join us for a live event on Thursday, April 9 from 10 AM – 11 AM, to hear CFO Andrea Tiller of Kranz Associates, CEO Mike Whitmire of FloQast  as they share best practices to establish, optimize and maximize the effectiveness of virtual Finance and Accounting teams. Also joining is Judy Kopa, CFO at Gigster, and Jerry Raphael, CFO at Stack Overflow who will share best practices of their organization and how their teams are more effective than ever.

April 9, 2020

10 AM – 11 AM


Register Now

Topics we will discuss:

  • How to operate efficiently and effectively when the finance and accounting team is working 100% remotely.
  • Special considerations for team structure and management when the team is not in the office together.
  • What tools and technology is available to facilitate working remotely and how to leverage for effective team collaboration.

All attendees are eligible to receive 1 CPE credit.

Register Now

How Kranz is Flattening the Curve – Our Operational Readiness Response to Coronavirus

Daryl Dobrenz, CEO, Kranz

The COVID 19 virus outbreak and its impacts are changing daily. At Kranz, we have communicated our operational readiness to our clients. We are maintaining a “fully ready to serve” stance in this dynamic, fast-changing environment. For Kranz, we remotely service the majority of our clients today and have done so for many years. We are experts at this support model and we know that many companies are rapidly working to do the same.   In addition, we are committed to the safety of all Kranz employees during this time and are leaning heavily on our remote work model.

We are all digesting so much information at this time and businesses are preparing to weather the storm. Sequoia Capital recently shared the below perspective with Sequoia portfolio company founders and CEOs.


Coronavirus: The Black Swan of 2020

Here is a note that we sent to Sequoia founders and CEOs today to provide guidance on how to ensure the health of their business while dealing with potential business consequences of the spreading effects of the coronavirus.

Dear Founders & CEOs,

Coronavirus is the black swan of 2020. Some of you (and some of us) have already been personally impacted by the virus. We know the stress you are under and are here to help. With lives at risk, we hope that conditions improve as quickly as possible. In the interim, we should brace ourselves for turbulence and have a prepared mindset for the scenarios that may play out.

All of you have been inundated by suggestions for precautions to take around COVID-19 to protect the health and welfare of you, your employees, and your families. Like many, we have studied the available information and would be happy to share our point of view — please let us know if that is of interest. This note is about something else: ensuring the health of your business while dealing with potential business consequences of the spreading effects of the virus.

Unfortunately, because of Sequoia’s presence in many regions around the world, we are gaining first-hand knowledge of coronavirus’ effects on global business. As with all crises, there are some businesses that stand to benefit. However, many companies in frontline countries are facing challenges as a result of the virus outbreak, including:

  • Drop in business activity. Some companies have seen their growth rates drop sharply between December and February. Several companies that were on track are now at risk of missing their Q1–2020 plans as the effects of the virus ripple wider.
  • Supply chain disruptions. The unprecedented lockdown in China is directly impacting global supply chains. Hardware, direct-to-consumer, and retailing companies may need to find alternative suppliers. Pure software companies are less exposed to supply chain disruptions, but remain at risk due to cascading economic effects.
  • Curtailment of travel and canceled meetings. Many companies have banned all “non-essential” travel and some have banned all international travel. While travel companies are directly impacted, all companies that depend on in-person meetings to conduct sales, business development, or partnership discussions are being affected.

It will take considerable time — perhaps several quarters — before we can be confident that the virus has been contained. It will take even longer for the global economy to recover its footing. Some of you may experience softening demand; some of you may face supply challenges. While The Fed and other central banks can cut interest rates, monetary policy may prove a blunt tool in alleviating the economic ramifications of a global health crisis…

Continue Reading

SEC Pro Group Silicon Valley Q4 Meeting

As a sponsor for the SEC Pro Group Silicon Valley Chapter, we are thrilled to announce our next in person meeting will be held on November 26th at our Chapter Co-Sponsor Wilson Sonsini’s Palo Alto Office. We will have 30 minutes of networking with your peers prior to the meeting. Please note that the live broadcast is set to occur earlier in the week and we will therefore be hosting a delayed broadcast. We encourage you to bring your Investor Relations colleagues.



8:00 AM – 8:30 AM Networking and Breakfast

8:30 AM – 10:00 AM SEC Pro Group Presentation Align SEC Reporting with Investor Relations followed by a live group discussion.

10:00 AM – 10:30 AM Wrap-up and Networking

Presentation Details

During our Q4 meeting, panelists will discuss how to align SEC reporting with investor relations to create a consistent company message that will provide investors with the financial and nonfinancial data they want. They will also share more on effective collaboration between departments, non-GAAP considerations, and how to manage Reg G and Reg S-K.

After this meeting, you will be able to:

Provide examples of effective communication and collaboration with an investor relations team

Map the flow of information during the quarterly and year-end earnings

Describe how SEC guidance on non-GAAP reporting could impact the 10-Q/10-K reporting processes

Recognize how different companies approach non-GAAP reporting measures

Explain the significant disclosure requirements under REG G and Item 10(e) of REG S-K and their impacts on reporting

SEC Pro Group Presenters

The Q4 meeting will be moderated by Graig Harr, Senior Director, Finance & Assistant Corporate Controller, MSC Industrial Supply Co; and Charlotte Advisory Co-Chair, SEC Professionals Group.

Panelists include:

MaryCatherine Regan, Senior Director and Assistant Controller, Campbell Soup Company

Howard Weissman, Chief Accounting Officer and Corporate Controller, Extended Stay America, Inc.

Kevin Powers, Vice President of Investor Relations, CommScope

John Chironna, Vice President of Investor Relations and Treasurer, MSC Industrial Supply Co.

We look forward to you joining us!

Kranz’s CFOs, Andrea Tiller and Nancy Bush, will be featured on the How Women Lead – Corporate Board and C-Suite Webinar Series

Kranz’s CFOs, Andrea Tiller and Nancy Bush, will be featured on the How Women Lead – Corporate Board and C-Suite Webinar Series on October 30th, , 12 noon –  1pm“Deep Dive Into Interpreting Financial Statements for Board Members”.  Register for the webinar at:

Investor Insight: Blockchain Industry & Opportunities Briefing

Join us next week 10/15 – Exclusive Invitation for Investors who want to become more knowledgeable about Blockchain investing opportunities: Briefing for Investors on Blockchain: Asset-Backed Securities vs. Cryptocurrencies?*  Join a phenomenal line up of panelists and industry leaders: Dara Albright/EisnerAmper, Joshua Deems/Fidelity, Tyler-Perry Smith/Kranz & Associates, Daniel Chatelain/The BayPay Forum, Chris Lawlor/Tezos, Jane Lippenscott/Winklevoss Capital, Brett Noyes/Unbank Ventures, Imran Khan/Token Daily and Nicole DeMeo/Andra Capital. For an invite simply email

#investors #Blockchain #financial #blockchainbusiness ‪#disruptingfinance #securitytokens #crypto