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New Guidance on the Payroll Protection Program

I have just received guidance that came out late yesterday about how to calculate how much to borrow for the PPP.


  1. If you pay sub contractors, you CANNOT include them in your calculations.  They must apply themselves.

  2. If you have applied for EIDL from SBA, and are getting an advance, add that to the amount you are asking for if you are going to use it for payroll.  Here is an example.

  3. No employees make more than $100,000, outstanding EIDL loan of $10,000. 

  4.     Annual payroll: $120,000 

  5.     Average monthly payroll: $10,000 

  6.     Multiply by 2.5 = $25,000

  7. Add EIDL loan of $10,000 = $35,000 

  8.     Maximum loan amount is $35,000

  9. You CANNOT include federal payroll taxes withheld or the employer's matching portion when calculating the payroll cost: Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees;

  10. The interest rate is 1% and the term is 2 years. You do not have to make a payment for six months from the date of the loan. 

  11. These loans will be on a first come first served basis.  

  12. These loan Can be forgiven, but be careful: That is, the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgivable purposes described below and employee and compensation levels levels are maintained.  These levels and payments for payroll are for the eight weeks after the loan. 

  13. Only 25% of the loan can be for costs other than payroll.  These are: Interest on mortgages or other debt obligations, rent or lease payments and utility payments on service contracts all of which had to be in existence before February 15, 2020.

  14. If you want to use your EIDL SBA loan for payroll costs, you must roll it into this loan.  If you want to use it for things other than payroll, do not roll it in.

  15. You can include costs related to continuation of group health care benefits during periods of paid sick, medical or family leave and insurance premiums.

  16. You must certify that this loan is necessary to support the ongoing operations due to current economic uncertainty.

  17. The lender will be reimbursed by the SBA so they should not charge you fees.


Here is the link to full notice that was issued by the Treasury Department. Business Loan Program Temporary Changes - Paycheck Protection Program

You can read the certification you will be required to sign on pages 17-19.

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