Important Update on the Paycheck Protection Program

In the latest effort to help small businesses and individuals, the CARES Act was announced last week. This past Wednesday, the Treasury Department provided the application with a subsequent revision released Thursday night along with additional guidance on the Paycheck Protection Program, or PPP as most of us know it.

Beginning today, April 3, small businesses and sole proprietors can begin the application process; and then, on April 10, independent contractors and self-employed individuals can begin the application process through existing SBA lenders. BMSS sent an email communication on Wednesday which can be found on our COVID-19 webpage if you would like more information. In addition, you can click on PPP Application which will take you directly to the Treasury Department’s website.

*Please note, the SBA released an updated PPP Application Form overnight. If you previously completed or submitted an application using the previous version, you will need to complete the new form found in the link above.

In the SBA guidance released last night, they clarify that applicants must exclude the employee and employer share of FICA and the employee income tax withholdings from the PPP loan forgiveness calculation. BMSS believes, based on current guidance, applicants may include the employee portion of FICA and income tax withholdings (gross payroll) for purposes of calculating the applicant’s average monthly payroll for purposes of determining their maximum loan amount. Although the PPP may loan funds based on payroll costs including these amounts, these items are not included in payroll costs when applying the loan forgiveness provisions based on the guidance released last night.

The SBA guidance from last night also indicated that independent contractors are not counted as employees for purposes of PPP loan calculations or PPP loan forgiveness because independent contractors have the ability to apply for a PPP loan on their own. Our understanding is that payments to independent contractors should be excluded from all calculations. The SBA has delegated authority to lenders to approve PPP loans. Therefore, lender interpretation of the guidance will also be critical with any application.

Please continue to contact your BMSS professional for assistance during this time of upheaval and uncertainty. We can talk with you about different strategies and approaches for your business as well as different programs and agencies available to help get you through this difficult time.