The Payroll Blog

News, tips, and advice for small business owners

What to Know About the Paycheck Protection Program: Loan Use

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Jackson Lewis

The below FAQs related to the Paycheck Protection Program are provided courtesy of Jackson Lewis.

A loan agreement form on a clipboard.

Update 3/30/21: On Tuesday, March 30, President Biden signed into law a 2 month extension for the current round of Paycheck Protection Program funding. In order to receive funds through the program, eligible businesses will need to apply by May 31st. 

Update, 8/7/20: As of August 8, the SBA will no longer be accepting applications for Paycheck Protection Program loans. Learn about other small business financing options.

Update 8/5/2020: On August 4th, the U.S. Small Business Association published new Paycheck Protection Program loan forgiveness FAQs. Our teams are working to review this new guidance and we will continue to keep you updated on how this may impact the loan forgiveness process, what is required as part of your forgiveness application, and how to use our in-app tools to support your application.

Update 7/4/2020: On July 4, 2020, President Trump signed into law an extension of the Paycheck Protection Program (PPP) loan application deadline to August 8.  Looking to apply for a loan? Find an SBA-approved lender. If you’re not sure if PPP is the right approach for your small business, start your research with these resources: maximizing PPP loan forgiveness and explore other small business financing options.

Update 7/2/2020: The Paycheck Protection Program is currently not accepting applications for loans, as the deadline to have a loan approved. As of July 1, both the U.S. Senate and House of Representatives have passed an extension of the application deadline to August 8. This now goes for President Trump's signature to become law. If you are planning to apply for a loan should the program reopen to new applications, get a head start: find an SBA-approved lender. While we await further news, you can learn more about maximizing PPP loan forgiveness and explore other small business financing options.

Update 6/30: As of June 30, 2020 applications for loans through the Paycheck Protection Program are closed. Looking for funding? Learn more about small business funding options that are still available.

Update, 6/9: The Paycheck Protection Program (PPP) Flexibility Act, which was signed into law June 5, 2020, made some significant changes to the PPP loan and loan forgiveness process. Read this blog post to learn more about the Flexibility Act. For additional PPP Loan Forgiveness support, check out the FAQs and forgiveness estimator on our Maximizing Loan Forgiveness hub.

Update, 6/5/20: On Friday, June 5 President Trump signed the Paycheck Protection Program (PPP) Flexibility Act of 2020 into law. Our online PPP Loan Forgiveness Estimator has been updated to reflect the new guidance in the law. We continue to actively update our existing PPP resources on this site as additional guidance is released.

Update, 6/3/20: On Wednesday, June 3 the U.S. Senate passed the Paycheck Protection Program (PPP) Flexibility Act of 2020, modifying certain provisions related to forgiveness of loans under the Paycheck Protection Program. The bill, having passed the legislative branch, now heads to the White House, where President Trump is expected to sign it into law. We are closely monitoring any legislative changes and will work through new guidance to provide up-to-date tools, reporting, and resources to help you maximize your loan forgiveness. Visit our Maximizing PPP Loan Forgiveness hub for the latest.

Update, 4/24/20: President Trump signed into law an additional allocation of funds for the Paycheck Protection Program (PPP) on 4/24/20. The law authorizes an additional $310 billion to the Paycheck Protection Program, $50 billion to the Economic Injury Disaster Loan (EIDL) program and $10 billion for EIDL grants

Notably, $60 billion of the allocated funds have been set aside for community lenders, including state and federal credit unions.

To help you move quickly to access these funds, we’ve put together a quick start guide. Link to:

Update, 4/16/2020: The SBA announced on April 16, 2020 that the initial $349 billion authorization for loans under the Paycheck Protection Program has been exhausted. Here’s what you need to know.

Update: We’ve created a specialized report that is currently available for SurePayroll users to help make applying for a Paycheck Protection Program (PPP) loan simpler. Log into your account to get your report today! Note that household employers are not eligible for a PPP loan.

What Can the Paycheck Protection Loan Be Used For?
(i) Payroll costs (as defined below in Q7 below) and (ii) interest payments on mortgage obligations,
rent, utilities, and interest on other debt obligations incurred prior to February 15, 2020.

What is included in “payroll costs” for this purpose?
Payroll costs are defined as the sum of payments of any compensation with respect to employees that is a —
• salary, wage, commission, or similar compensation (capped at $100,000 prorated for the covered period or $8,333 per month)
• payment of cash tip or equivalent
• payment for vacation, parental, family, medical, or sick leave
• allowance for dismissal or separation
• payment required for the provisions of group health care benefits, including insurance premiums
• payment of any retirement benefit
• payment of State or local tax assessed on the compensation of employees and the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period

What is excluded from “payroll costs” for this purpose?
Specifically excluded from the definition of payroll costs are —
• the compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the covered period
• FICA (Social Security and Medicare) taxes imposed on the employer, FICA (Social Security and Medicare) taxes withheld from employees’ wages, federal income taxes withheld from employees’ wages withholding during the covered period
• any compensation of nonresident alien employees
• qualified sick leave wages for which a credit is allowed under FFCRA
• qualified family leave wages for which a credit is allowed under FFCRA

Is the business required to sign a guarantee or provide collateral for the loan?
No, normal requirements for SBA loans have been waived.

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This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.