{"id":7302,"date":"2020-04-28T09:00:32","date_gmt":"2020-04-28T13:00:32","guid":{"rendered":"https:\/\/peakinsuranceadvisors.com\/?p=7302"},"modified":"2020-04-28T16:30:58","modified_gmt":"2020-04-28T20:30:58","slug":"paycheck-protection-program-for-small-businesses-faqs","status":"publish","type":"post","link":"https:\/\/peakinsuranceadvisors.com\/paycheck-protection-program-for-small-businesses-faqs\/","title":{"rendered":"Paycheck Protection Program for Small Businesses FAQs"},"content":{"rendered":"

Paycheck Protection Program for Small Businesses FAQs<\/h1>\n

\"PaycheckUpdated: 04.26.2020<\/em><\/strong>\u00a0 The SBA and Treasury Department published updates to their Payroll Protection Program on 4-26-2020. The following is a sampling of FAQs that serve as a supplement to the Paycheck Protection Program (PPP)<\/strong> Loan.\u00a0 Below are their most recent updates and links to further information.<\/p>\n

FAQ # 1\u00a0Question: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value?<\/strong>
\nAnswer:<\/strong> No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:
\n\u00b7 employer contributions to defined-benefit or defined-contribution retirement plans;
\n\u00b7 payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
\n\u00b7 payment of state and local taxes assessed on compensation of employees.<\/p>\n

FAQ # 2\u00a0\u00a0\u00a0Question: Do PPP loans cover paid sick leave?<\/strong>
\nAnswer:<\/strong> Yes. PPP loans covers payroll costs, including costs for employee vacation, parental, family, medical, and sick leave. However, the CARES Act excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116\u2013127).<\/p>\n

FAQ # 3 \u00a0 Question: What time period should borrowers use to determine their number of employees and payroll costs to calculate their maximum loan amounts?<\/strong>
\nAnswer:<\/strong> In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019.<\/p>\n

For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019.<\/p>\n

An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.<\/p>\n

Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard.<\/p>\n

Alternatively, borrowers may elect to use SBA\u2019s usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months).<\/p>\n

FAQ # 4 \u00a0 Question:\u00a0 Should payments that an eligible borrower made to an independent contractor or sole proprietor be included in calculations of the eligible borrower\u2019s payroll costs?<\/strong>
\nAnswer:<\/strong> No. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business\u2019s payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.<\/p>\n

FAQ # 5 \u00a0\u00a0Question: The amount of forgiveness of a PPP loan depends on the borrower\u2019s payroll costs over an eight-week period; when does that eight-week period begin?<\/strong>
\nAnswer:<\/strong> 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.<\/p>\n

FAQ # 6\u00a0\u00a0\u00a0Question: To determine borrower eligibility under the 500-employee or other applicable threshold established by the CARES Act, must a borrower count all employees or only full-time equivalent employees?<\/strong>
\n\u00a0Answer<\/strong>: For purposes of loan eligibility, the CARES Act defines the term employee to include \u201cindividuals employed on a full-time, part-time, or other basis.\u201d A borrower must therefore calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold. For example, if a borrower has 200 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 250 employees.<\/p>\n

By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of \u201cfulltime equivalent employees\u201d to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions.<\/p>\n

Additional guidance is expected.<\/p>\n

Paycheck Protection Program Loans (PPP) Frequently Asked Questions \u2013 updated April 26, 2020:
\nhttps:\/\/home.treasury.gov\/system\/files\/136\/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf<\/a><\/p>\n

Paycheck Protection Program information sheet (Borrowers):
\nhttps:\/\/home.treasury.gov\/system\/files\/136\/PPP–Fact-Sheet.pdf<\/a><\/p>\n

 <\/p>\n

Original Post – as of 4\/1\/2020<\/em><\/p>\n

As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the<\/u> Paycheck Protection Program (PPP)<\/u> <\/strong>provides $349 billion of loan funds to support small businesses and other eligible entities impacted by COVID-19 to pay workers, interest on mortgage obligations, rent, insurance, paid sick or medical leave, utilities, and payroll related costs incurred from February 15, 2020 \u2013 June 30, 2020. Below is paycheck protection program for small businesses FAQ\u2019s we are passing along to you from the NY State Development Corp and is current as of April 1, 2020.<\/u><\/strong> You can visit the NYSDC for updates and further guidance at https:\/\/esd.ny.gov\/<\/a> as it becomes available. We are not accountants nor lawyers, and we are providing this information as a courtesy to you. You should consult with your own tax professional before making any decisions.<\/p>\n