What to Know About the Paycheck Protection Program: Loan Use
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: https://www.surepayroll.com/resources/blog/ppp-quick-start
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.