Thursday, April 2, The US Treasury issued the Paycheck Protection Program (PPP) – Interim Final Rule.
This governing document includes a number of changes and clarifications made to the original Bill.
The following items highlight the major changes:
- The borrower shall submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099-MISC, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount.
- The PPP borrowing limit is increased by any outstanding loan under the EIDL program made between January 31, 2020, and April 3, 2020, excluding the “advance” amount under the EIDL program.
- Independent contractors DO NOT count as employees for purposes of the PPP loan.
- The interest rate on the loan is 100 basis points or one percent.
- The maturity date is two years (10 years per the original Bill).
- A borrower may only apply one time for a PPP loan; therefore, it is important to maximize the loan amount.
- The PPP is “first-come, first-served” – so, submit your application ASAP.
- Interest will accrue on the PPP loan during the 6 month deferment (loan forgiveness can offset the accrued interest).
- No more than 25% of the loan forgiveness amount may be attributable to non-payroll costs.
- “Payroll costs” excludes 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.
ARB is dedicated to updating our clients and community as the legislative implications of the COVID-19 pandemic continue to unfold. For additional information or questions on the Paycheck Protection Program and related matters, contact us today.
by David Jean, CPA