Paycheck Protection Program

January 11, 2021

From the time the Paycheck Protection Program was introduced with the enactment of the CARES Act on March 27, 2020, numerous clarifications, changes, and guidance have been issued by the Small Business Administration. This page consolidates all of our past communications to our clients on the topic and will continue to be updated as more guidance comes out.

As always, please let us know if you have any questions or if we can be of assistance.


January 11, 2020 – New Guidance Released Regarding PPP Loans

Last week, we shared with you some of the highlights of the new stimulus package intended to provide additional relief to businesses and individuals. Since then, the Small Business Administration (SBA) has issued additional guidance for PPP borrowers. The following are some of the highlights of the guidance issued:

  • As we mentioned in our prior update, businesses must show a 25% decrease in gross receipts to qualify for a second draw loan. The new guidance provides that, in addition to comparing gross receipts from any quarter in 2020 with the same quarter in 2019, businesses can also choose to compare all of 2019 with all of 2020. Substantiation of gross receipts may include tax forms, quarterly financial statements, or bank statements.
  • For purposes of the above, gross receipts are defined as follows:
    • “…all revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. Generally, receipts are considered “total income” (or in the case of a sole proprietorship, independent contractor, or self-employed individual “gross income”) plus “cost of goods sold,” and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms.”
    • Forgiven PPP loans are excluded from gross receipts in 2020 for purposes of determining a 25% decrease.
  • First-draw PPP borrowers are eligible for a second draw only if they have or will use the entire amount from the first draw on eligible PPP expenses on or before the expected disbursement date of the second draw.
  • Businesses applying for a second draw are not required to submit additional documentation to substantiate payroll costs if they used calendar year 2019 figures to determine the first draw, plan to use the same 2019 figures for the second draw, and apply with the same lender as from the first draw.
  • A business that is permanently closed is not eligible to apply for a second draw PPP loan; however, a business that temporarily closed or suspended its operations is still eligible.

Please note that our summary above only provides the highlights, while the SBA’s recent guidance for second draw loans contains much more details which may apply to your specific situation.

Following are one-page summaries and the most recent application forms that the SBA has recently posted on its website:

For first-time PPP borrowers:

For second draw PPP borrowers:

As always, please let us know if you have any questions.


January 4, 2020 – PPP Provisions in Latest Stimulus Bill

As you may already be aware, last week, the President signed the Consolidated Appropriations Act of 2021, a new stimulus package intended to further extend financial relief to both businesses and individuals.

Following are some of the highlights relating to the Paycheck Protection Program:

1. Deductibility of PPP-Funded Expenses

The legislation provides that expenses paid for with proceeds from a PPP loan that is either forgiven or expected to be forgiven are deductible. This reverses previous guidance from the Treasury and IRS, which disallowed such deductions. Please note that California has not conformed to this amendment to the federal law, so such expenses remain non-deductible for California tax purposes.

2. Expansion of Eligible PPP Expenses

The bill expands the type of expenses for which both existing and new PPP loans can qualify for forgiveness, but only for PPP loans that have not yet been forgiven. In addition to payroll, rent, mortgage interest, and utilities, PPP proceeds may now also be used for the following:

  • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines
  • Expenditures to a supplier of goods that are essential at the time of purchase to the business’s current operations
  • Payments for any business software or cloud computing service that facilitates business operations; product or service delivery; the processing, payment, or tracking of payroll expenses; human resources; sales and billing functions; or accounting or tracking of supplies, inventory, records, and expenses
  • Costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or otherwise compensated

Note that there has been no change to the requirement that at least 60 percent of PPP loan proceeds be used for payroll expenses.

3. Additional PPP Loans

  • Businesses that have experienced at least a 25% decline in gross revenues for a quarter in 2020 compared to the same quarter in 2019 and have 300 or fewer employees (including part-time and seasonal) can apply for a new round of PPP loans.
  • The maximum loan amount is the lesser of $2 million or 2.5 times the borrower’s average monthly payroll in either (a) the one-year period prior to the date on which the loan is made or (b) calendar year 2019. Borrowers in the hospitality business (typically restaurants and hotels) are generally permitted to use a multiplier of 3.5 instead of 2.5.
  • This second round of PPP loans is available not only to first-time qualified borrowers but also to borrowers that previously received a PPP loan. However, a borrower that previously received a PPP loan must also show that they either have used or will use the remaining proceeds from the first loan before the second loan is disbursed.
  • For this latest round of PPP loans, borrowers are able to choose the length of their covered period (the time borrowers have to use the funds to qualify for forgiveness) as long as it is at least 8 weeks and not longer than 24 weeks. This will provide some flexibility over how a borrower handles potential reductions in workforce once the PPP funds are used up.
  • The deadline to apply is the earlier of March 31, 2021 or until the $284 billion in allotted funds is used up.

4. Ability to Request Increase in Original PPP Loan Amount Due to Updated Regulations

Borrowers whose PPP loans have not yet been forgiven can also submit supplemental PPP loan requests in all cases where their original PPP loan amount would have been higher due to new rules that have been released since they originally applied.  For example, this would benefit partnerships that applied for a loan before guidance came out to clarify that self-employed earnings of the partners could be included in the calculation of the maximum loan amount. This also applies to borrowers who returned all or a portion of their original loans, or took reduced loans to qualify for other benefits that are no longer limited for PPP recipients, such as the Employee Retention Credit.

5. PPP Loan Forgiveness

  • The legislation provides for simplified forgiveness for PPP loans of $150,000 or less whereby the borrower certifies to the lender on a one-page application the number of employees retained because of the loan, the estimated amount of loan proceeds spent on payroll costs, and total loan value. No additional information will be required to be submitted, but the borrower must attest that they will retain relevant records for at least 4 years from submission of the loan forgiveness application.
  • EIDL advances will no longer reduce the amount of PPP loan forgiveness.

Please let us know if you would like to discuss how any of these provisions may impact your particular situation.


August 25, 2020 – Additional PPP Loan Forgiveness Guidance Issued

The most recent PPP loan forgiveness guidance, issued yesterday, addresses minority shareholders, sole proprietors with home office expenses, self-renters, and borrowers with tenants or subtenants, as follows:

  • Owner-employees with less than a 5% ownership interest in a C or S corporation are exempt from  application of the owner-employee compensation rule, which generally limits the amount of compensation eligible for loan forgiveness to 2.5 months of compensation reported on the 2019 return.
  • Home-office expenses do qualify for loan forgiveness, but only to the extent of covered expenses deductible on the borrower’s 2019 tax filings. If the business did not exist in 2019, it will be based on deductible amounts of covered expenses on the borrower’s expected 2020 tax filings.
  • Self-renters now have confirmation that rent or lease payments to related parties (defined for this purpose as any amount of common ownership between the business and the property owner) are eligible for forgiveness, with the following limitations:
    1) The rent eligible for forgiveness cannot exceed the amount of mortgage interest owed on the property during the covered period that is attributable to the space being rented by the borrower, and
    2) Both the lease and the mortgage must have been entered into prior to February 15, 2020.
  • Borrowers who have tenants or subtenants cannot include amounts attributable to such tenants or subtenants in their costs eligible for loan forgiveness. For example, a borrower who pays $10,000 per month in rent and subleases out a portion of the space for $2,500 a month can only include $7,500 per month in computing amounts eligible for loan forgiveness.

Please let us know if you have any questions or if we can be of any assistance.


July 6, 2020 – Deadline to Apply for PPP Loans Extended to August 8th

As most of you are aware, the deadline to apply for a PPP loan was June 30th, leaving the program with over $100 billion in untapped funds. That deadline has now been extended to August 8th, providing more time for businesses and self-employed individuals to apply.

Please keep in mind that lenders had been closing their application portals 7-10 days prior to the loan application deadline. If you have not yet applied and believe you meet the criteria for applying, you should contact your lender right away to start the loan application process.

As always, please let us know if you have any questions.


June 18, 2020 – Additional PPP Guidance and Updated Loan Forgiveness Applications Released

The SBA and Treasury have updated their previous guidance, application for loan forgiveness, and the instructions to the application to provide further clarifications and to reflect changes made by the Paycheck Protection Flexibility Act of 2020 (“PPFA”).

Following are the highlights:

  1. A new simplified loan forgiveness application, Form 3508EZ, has been released and can be used by borrowers who either:
    • are self-employed with no employees or
    • have employees but are not subject to loan forgiveness reduction due to workforce or salary reductions (see Form 3508EZ instructions for more details).
  1. As previously reported, the actual amount of loan forgiveness will depend, in part, on the total amount spent over the “covered period” – which is now the 24-week period beginning on the date your PPP loan is disbursed. (Borrowers who received their PPP loan proceeds before June 5, 2020 still have the option to elect to use an 8-week covered period). The additional guidance clarifies that for borrowers using the new 24-week covered period:
    • A maximum of $46,154 (24 weeks /52 x $100,000 cap) of pay per employee qualifies for loan forgiveness, and
    • Owner compensation replacement is increased to a maximum of $20,833 per owner based on their 2019 compensation (2.5 months /12 x $100,000 cap). Note that the guidance specifically prevents unexpected windfalls for owners by not expanding the forgivable amount for owner compensation commensurate with the amount allowable for employees.

Furthermore, the loan forgiveness application specifically lists as “owners” subject to the lower owner compensation replacement cap “owner-employees, a self-employed individual, or general partners”. As such, it appears that compensation of corporation shareholder-employees are also included.

  1. The updated application instructions also clarify that eligible payroll costs eligible for loan forgiveness:
    • Excludes employer health insurance contributions made on behalf of self-employed individuals, general partners, or S corporation owner-employees (because such payments are already included in their compensation),
    • Excludes employer retirement contributions made on behalf of self-employed individuals or general partners (because such payments are already included in their compensation), and
    • Includes retirement contributions made on behalf of owner-employees, but is capped at 2.5 months’ worth of the 2019 contribution amount. Note that this limit is included on the simpler EZ application but is not included on the full forgiveness application or the updated guidance, though it is possible it will be added in the future.
  1. As expected based on a joint statement made by the Treasury and the SBA shortly after the PPFA was enacted, the requirement that at least 60% of PPP loan proceeds be used on payroll costs is a cap on the amount eligible for loan forgiveness and not a cliff. This means that a borrower who uses less than 60% of the loan for payroll costs can still obtain partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs.

For example, a borrower who received a $100,000 PPP loan and used $40,000 for qualifying payroll costs and $60,000 on non-payroll qualifying expenses would be eligible for at most $40,000 / 60% = $66,667 of loan forgiveness.


As a reminder, the deadline to apply for a PPP loan is June 30th. More PPP loan forgiveness guidance is expected soon, and we will continue to update you as soon as that becomes available. Please contact us if you have any questions regarding the Paycheck Protection Program.



June 5, 2020 – Paycheck Protection Flexibility Act provides for favorable changes to PPP loan forgiveness

Update: The Treasury and the SBA issued a statement on June 8th clarifying that the requirement that at least 60% of PPP proceeds be used for payroll is not a cliff, but rather a cap. That is, partial loan forgiveness is available even if proceeds are used less than 60% on payroll costs. The below has been updated to reflect this.

This morning, the President signed into law the Paycheck Protection Flexibility Act of 2020, which provides for more flexibility in achieving full loan forgiveness, as well as other borrower-favorable changes. The highlights are as follows:

  • PPP borrowers now have 24 weeks from loan origination (instead of the original eight-week period) to make qualifying expenditures for loan forgiveness, though such expenditures must be made no later than December 31, 2020 (in the case of new borrowers). This flexibility is designed to make it easier for more borrowers to reach full, or almost full, forgiveness.
    • Borrowers who received the loan on or after June 5, 2020 can elect to keep the original 8-week covered period.
  • The requirement that at least 75% of the PPP loan proceeds be used on payroll costs has been reduced to 60%, providing for greater flexibility in spending. Partial loan forgiveness is possible if payroll costs are less than 60% of the total, but at least 60% of the loan forgiveness amount must have been used for payroll.
  • Borrowers will have until December 31st (instead of June 30th) to restore their workforce levels and wages to the pre-pandemic levels required for full loan forgiveness.
  • The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from the calculation of loan forgiveness reduction, workforce reductions due to employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to also exclude from the computation reductions in workforce if they can document that the reduction was due to the business’s inability to either:
    • hire similarly qualified employees for unfilled positions by December 31, 2020, or
    • restore business operations to pre-February 15, 2020 levels due to COVID-19 related operating restrictions.
  • The bill allows for a 5-year rather than a 2-year maturity date for:
    • All loans made on or after the bill’s date of enactment; and
    • Loans made earlier than that, if both the lender and borrower mutually agree.

The interest rate will remain at 1%.

  • Borrowers can defer payments of principal, interest, and fees on any unforgiven PPP loan balances until the SBA remits the borrower’s loan forgiveness amount to the bank (previously, this period was 6 months to 1 year from the loan origination date). However, such payments must begin 10 months after the end of the applicable 24-week period (but no later than October 31, 2021), if a borrower does not apply for forgiveness by then.
  • The bill allows businesses that obtain PPP loan forgiveness to also delay payment of their payroll taxes, which was prohibited under the CARES Act.

We recommend you check with your lender on when your PPP loan forgiveness application must be submitted, as it is ultimately up to them to collect, review, and process your application.


May 18, 2020 – PPP Loan Forgiveness Application Now Available

The SBA and Treasury have released the PPP loan forgiveness application along with detailed instructions for the application. The application and instructions can be found on the SBA website at this link.

As expected, the instructions provide some clarity and interpretations that are helpful for borrowers. Following are some of the highlights:

  • For purposes of calculating eligible payroll costs, borrowers with a biweekly payroll schedule (or more frequent) may elect to use an “alternative payroll covered period” that begins on the first day of their first pay period following the PPP loan disbursement date (as opposed to the PPP loan disbursement date). This would provide for more administrative ease as well as potentially provide for a higher forgivable loan amount.
  • Payroll costs generally must be both paid and incurred to be eligible for loan forgiveness. However, payroll costs incurred but not paid during the last pay period of the covered period (or alternative payroll covered period if elected) are also eligible if paid on or before the next regular payroll date. Keep in mind that total payroll costs per employee are capped at an annual salary of $100k, prorated for the covered period (i.e., $100k / 52 weeks x 8 weeks = maximum of $15,385 per employee).
  • Clarification that mortgage or rent/lease payments on both real and personal property are allowable during the covered period.
  • Clarification that “covered utility payments” include business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.
  • Clarification that non-payroll costs must be paid during the covered period or incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period. For non-payroll costs, the covered period is still the 8-week period starting on the date of PPP loan funding. The “alternative payroll covered period” discussed above only applies to payroll costs.
  • For purposes of determining the reduction in amount eligible for loan forgiveness due to a reduced workforce (based on full-time equivalent employees), the average weekly full-time equivalency (FTE) during the covered period is compared to the average weekly FTE during the chosen applicable reference period. Specifically, the average weekly FTE computation calls for the following: For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth, but not to exceed 1.0 per employee. Alternatively, you can elect to apply a simplified method whereby you assign a 1.0 to employees who work 40 hours or more and a 0.5 to employees who work fewer hours.
  • For purposes of determining the loan forgiveness reduction due to salary/hourly wage reductions, the average annual salary or hourly wage from the period January 1, 2020 to March 31, 2020 is compared to the average annual salary or hourly wage during the covered period or alternative payroll covered period.
  • Clarification that for purposes of determining FTE reduction, an exception is made for the following employees (can be excluded from consideration): any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours.

Please note, the application and instructions are lengthy and detailed, and this summary does not cover the entirety of information included at the link above. Ultimately, it will be up to your lender to audit and approve expenses for which you apply for loan forgiveness. We recommend that you carefully review the application and accompanying instructions and reach out to us if we can help you navigate this process.


May 14, 2020 – Relief Provided by SBA: Ability for Partnerships and Seasonal Employers to Adjust PPP Loan Amounts

From the time the Paycheck Protection Program was introduced with the enactment of the CARES Act on March 27th, numerous clarifications, changes, and guidance have been issued by the SBA. If you were one of the earlier applicants, such guidance may have come out after you had already submitted your PPP loan application or even after you had already received your PPP loan proceeds, preempting you from getting a higher PPP loan than you are otherwise eligible for.

Yesterday evening, the SBA provided some relief to partnerships and seasonal employers, allowing them to increase their PPP loan amounts in such cases. This applies even if PPP loan proceeds have already been disbursed, but not if the lender has reported the loan on Form 1502 to the SBA. Lenders are generally required to submit this form within 20 calendar days after a PPP loan is approved, although earlier loans have an extended May 22nd deadline.

Such borrowers who qualify for a higher PPP loan amount than they had applied for should contact their lender immediately to see if they can take advantage of this new guidance.

For more details, click here for the complete Interim Final Rule issued yesterday.

As a reminder, below are the prior SBA Interim Final Rules which, when considered with the guidance mentioned above, may provide for a PPP loan increase:

  • The additional guidance for partnerships was released on April 14th, allowing self-employment income of general active partners to be included as a payroll cost (up to $100,000 annualized).
  • The additional guidance for seasonal employers was released on April 28th, allowing for an alternate base period for computing monthly average payroll (for purposes of computing the maximum loan amount).


May 13, 2020 – SBA Adds FAQ 46: Safe Harbor for Good-Faith Certification

With the negative publicity around larger companies receiving PPP loans, along with the SBA’s issuance on April 23rd of FAQ 31, many businesses have been wary of applying for or keeping PPP loan proceeds.

Earlier today, the SBA issued additional guidance in the form of FAQ 46 addressing how the SBA will review borrowers’ good-faith certification concerning the necessity of their PPP loan requests. Most notably, the FAQ included the following safe harbor:

Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

We continue to recommend that if you do receive and keep PPP funding, that you maintain complete and accurate documentation to support your eligibility for and use of such funding.

The full text of the FAQ, which includes the SBA’s reasoning for providing this safe harbor, can be found at the following website:


May 1, 2020 – Paycheck Protection Program – Additional Guidance

We wanted to pass along some additional guidance regarding the PPP loans that has come out in the past week, as follows:

[1]  PPP loan calculations for self-employed individuals and partnerships

The SBA has issued additional guidelines on calculating monthly payroll costs for Paycheck Protection Program loans for all entities, including self-employed taxpayers and partnerships.

Here is a link to the new guidance:  PPP – How to Calculate Maximum Loan Amounts – By Business Type.

In particular, the guidance provides that a partnership applying for a PPP loan can include in its payroll cost computation the self-employed income of its general partners based on their 2019 Schedule K-1 box 14A, reduced by any Section 179 deduction claimed, unreimbursed partnership expenses claimed, and depletion claimed on oil and gas properties, multiplied by 0.9235, up to $100,000 per partner.

[2]  No deductions for expenses paid by PPP debt that is forgiven

The IRS has issued guidance stating that taxpayers may not deduct expenses that were paid by PPP loans that are forgiven under the program.

The guidance explains that because PPP loan forgiveness is excludable from taxable income under the CARES Act and the Internal Revenue Code disallows deductions paid with exempt income, the expenses paid with proceeds from a forgiven PPP loan are not deductible.

Here is a link to the IRS guidance: IRS Notice 2020-32

[3]  California nonconformity

The Franchise Tax Board has stated that PPP loans that are forgiven will be taxable for California tax purposes.

Each state follows its own rules regarding the extent to which it conforms to federal changes in the tax law. If you are not a resident of California and would like to know if your state conforms, please ask us.


April 30, 2020 – Paycheck Protection Program Considerations

Update: FAQ 43 was added on May 5, 2020 to extend the safe harbor deadline from May 7th to May 14th, and FAQ 47 was added on May 13th to further extend the deadline to May 18th. The below has been updated to reflect the extended deadline.


The Paycheck Protection Program and Health Care Enhancement Act (“Enhancement Act”) was signed into law on April 24th, infusing an additional $310 billion into the Paycheck Protection Program (“PPP”).

Numerous recent headlines have shone the spotlight on the distribution of the first round of PPP funds to large restaurant chains and other prominent public and private companies. Many have questioned the propriety of the eligibility requirements as well as the integrity and ethics of many organizations that have applied for funding.

The PPP was designed specifically to provide eligible small businesses immediate relief if they believe and are willing to certify to the lender that current economic uncertaintyof the COVID-19 pandemic makes such a loan for their business necessary to support their ongoing operations. Unfortunately, the initial guidance from the SBA did not provide any definition or specifics regarding the nature or extent of the required impact to operations or the “current economic uncertainty” that would make the loan request “necessary to support ongoing operations”. In addition, since the PPP loan has a forgiveness component if a business meets certain conditions, the program has been touted by many as “free money”. Consequently, demand for PPP loans has been overwhelming.

On April 23rd, the SBA updated its Frequently Asked Questions Document to add FAQ 31. The new FAQ provides much-needed clarity regarding program qualifications specific to businesses with access to other sources of liquidity to support their ongoing operations. Any business that received a PPP loan prior to the issuance of this new guidance and who now believes that they do NOT demonstrate the necessity for the loan has until May 18, 2020 to repay the loan in full to be deemed by the SBA to have made the required certification in good faith.

We certainly understand that there has been a justifiable rush for eligible small businesses to expedite processing of these loans and you may be primed to submit your PPP application. However, we want to caution you as to the potential risks of receiving these funds, as these loans will be subject to regulatory and public scrutiny. Loan recipients will not remain anonymous, as EINs will be made public. We anticipate heightened government scrutiny will be forthcoming to investigate potential fraud and abuse. Businesses that have received PPP loans and are later found to have not qualified under the eligibility rules and/or businesses that do not use the funding in accordance with the terms of the program could be subject to significant legal or regulatory consequences. Further, businesses may experience reputational damage for having inappropriately pursued these loans.

Given the revised guidance issued by the SBA and the pending May 18, 2020 deadline for returning loan proceeds, we strongly encourage you, your organization’s management, and board of directors, as applicable, to carefully and immediately review your company’s financial situation and reconsider the relief you may have already received with a PPP loan. Specifically, consider whether your circumstances fall within the spirit and intent of this economic relief program. If you do receive and keep PPP funding, it is critical that you maintain complete and accurate documentation to support your eligibility for such funding, the specific use of these funds, as well as your qualifications for forgiveness under the terms of the program. This documentation will be crucial were your business to be audited and/or investigated.

Many of the factors influencing whether you qualify or should apply for these loans are organization-specific. We encourage you to consult with legal counsel if you have questions regarding your organization’s eligibility to receive funds.

We recognize that these are difficult times and we remain committed to supporting you. If you would like our assistance with evaluating whether the PPP or other small business loan programs and/or economic relief measures are appropriate for you, please contact us.


April 14, 2020 – Additional Guidance on PPP Loans

The Small Business Administration released an additional Interim Final Rule this afternoon that addresses a couple key areas of uncertainty around the Paycheck Protection Program (PPP).

  • The new guidance discusses loan amounts and loan forgiveness calculations for individuals with self-employment income (with and without employees).
  • Additionally, the guidance clarifies that the self-employment income of “general active partners” may be reported as a payroll cost, up to $100,000 annualized, on a PPP application filed by or on behalf of the partnership (including an LLC taxed as a partnership).

We will continue to update you as new developments arise. As always, please do not hesitate to reach out with any questions.


April 3, 2020 – SBA releases Interim Final Rule regarding Paycheck Protection Program

The U.S. Small Business Administration (SBA) has issued an interim final rule that provides further clarification regarding the Paycheck Protection Program (PPP). Click here for the text of the interim final rule.

The following points highlight key clarifications or changes from the initial text of the CARES Act:

  • Payments to independent contractors do not count in payroll costs for purposes of computing the maximum loan or forgivable amounts. Only compensation to employees should be taken into account.
  • Not more than 25% of the loan forgiveness amount may be attributed to non-payroll costs (interest on mortgage obligations, rent/lease payments, and utility payments). In other words, for the full loan amount to be forgiven, 100% of the loan proceeds must be used in the eight-week period following the date of the loan, and not less than 75% of the amount spent must be used for payroll costs.
  • SBA will issue additional guidance relating to loan forgiveness.
  • 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 (noted as maximum of 4% with maximum maturity of 10 years in the original text of the bill).
  • SBA intends to promptly issue additional guidance with regard to the applicability of affiliation rules.
  • Electronic signatures and consents are allowed.

If you are interested, the SBA has provided explanations for some of the changes in its new interim final rule (please use the link above to access).

A revised version of the PPP loan application was also released, and can be found here. The revised application only requires one signer, whereas the previous draft required all 20% or more owners to sign.


March 31, 2020 – Paycheck Protection Program application now available

As a follow-up to the newsletter we just sent, the Treasury Department has just released the application and information guide to the Paycheck Protection Program.  Please see the links below and reach out to us with any questions or if you need assistance.


March 31, 2020 – CARES Act – Paycheck Protection Program, Loan Forgiveness, and Emergency EIDL Grants

The President signed a massive economic relief bill on Friday. There are many tax and financial aspects to the new law, and we are all in the process of dissecting the various sections to see which ones will help you. We will be sending out summaries in the coming days on specific sections of the new law, beginning with the one below that discusses the expansion of two federal small business loan programs.

Please keep in mind that further guidance and clarifications will be forthcoming over the coming weeks as the law is still new and in some cases not 100% clear. We will continue to provide updates when relevant clarifications become available.

Click here to download a PDF of the summary: Paycheck Protection Program and EIDL Grants