Small Business Administration releases Payroll Protection Program FAQs
Since the CARES Act was signed into law in late March, the most talked about provision has been the Payroll Protection Program (PPP). It has also been a cause for much confusion. On Monday, April 6, the Small Business Administration (SBA) released additional guidance in the form of frequently asked questions. Included in the guidance are answers to many questions that have been raised by the business community since the enactment of the law:
- For purposes of calculating an eligible businesses’ loan amount and the amount that is eligible for loan forgiveness under the act, gross payroll should be used. Employee FICA, Medicare, and Federal Income Tax Withholding are not subtracted from gross payroll. Additionally, the employer portion of FICA and Medicare are not included in the calculation.
- The $100,000 cap per employee only includes gross compensation and not health insurance costs or employer paid retirement benefits for that employee. In other words, the health insurance and employer paid retirement benefits should be added to the $100,000 of eligible compensation for each employee.
- Payments made to independent contractors are not included in the calculation of an eligible businesses’ loan amount or the amount eligible for loan forgiveness.
- Businesses that use Professional Employer Organizations (PEO) to process their payroll can include these wages in their loan calculation.
- Businesses can use either calendar year 2019 or the 12 months prior to the date that a loan application is submitted when calculating their eligible loan amount.
Read the complete document from the SBA that provides additional guidance for both borrowers and lenders. Or, contact a Dugan & Lopatka professional at firstname.lastname@example.org or (630) 665-4440 for assistance with your small business.