As of April 17, 2020, the Treasury Department issued new FAQs on the Paycheck Protection Program loan program.
Questions and answers that may be particularly relevant to charitable organizations include:
The amount of forgiveness of a PPP loan depends on the borrower’s payroll costs over an eight-week period; when does that eight-week period begin?
The eight-week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The lender must make the first disbursement of the loan no later than ten calendar days from the date of loan approval.
Must a lender replicate or check every borrower’s calculations used to determine average monthly payroll cost?
No - but lenders are required to perform a good-faith review of the documentation. Borrowers must also attest to the accuracy of their calculations. Payroll reports from recognized payroll processing companies can be helpful for this purpose.
Does excess compensation over $100,000 include all types of compensation including benefits that have a monetary value?
No - compensation in excess of $100,000 annually that must be excluded from payroll calculations applies only to cash compensation, not to non-cash benefits.
Do PPP loans cover paid sick leave?
Yes - PPP loans cover payroll costs, including costs for employee vacation, parental, family, medical, and sick leave, but excludes qualified sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act.
Can an application be signed by a single individual on behalf of the employer?
Yes – but only an authorized representative of the business seeking a loan may sign on behalf of the business.
What is the time period that borrowers use to determine their number of employees and payroll costs to calculate their maximum loan amounts?
Either the 12-month period preceding the date of the loan or calendar year 2019 may be used.
Should payments made to an independent contractor be included in the calculation of the borrower’s payroll costs?
No - any amounts that a borrower has paid to an independent contractor should be excluded from the eligible business’s payroll costs. Independent contractors can apply for PPP loans themselves if they meet the requirements.
How should a borrower account for federal taxes withheld when determining its payroll costs for purposes of the maximum loan amount, allowable uses of loan proceeds, and the amount that may be forgiven?
Payroll costs are calculated on a gross basis without subtracting federal taxes imposed or withheld from employees, but payroll costs do not include the employer’s share of payroll tax.
Must a borrower who filed a loan application under the original guidance now update the application based on newer guidance?
No - borrowers and lenders may rely on the laws, rules, and guidance available at the time of the relevant application.