The SBA and the US Treasury issued a Frequently Asked Questions document yesterday. Paycheck Protection Program Frequently Asked Questions April 6 2020 This is helpful as many companies and business owners are having trouble filling out the application. There is also some disagreement among the banks as to what is allowed or not allowed.
We wanted to highlight several items of interest for you:
- #7 – Compensation in excess of $100,000 only applies to cash compensation, not to non-cash benefits (health and retirement). So someone could have $105,000 of wages and a $10,000 employer retirement match, and only $5,000 would be excluded.
- #10 – Third party payers or Professional Employer Organizations – this is a good reference for documentation required if someone uses a third party payer or PEO.
- #14 – Clarifies that borrowers can use the previous 12 months or calendar year 2019. It is good to know that going forward if the previous 12 months is available, it can be used.
- #15 – It clarifies that payment to independent contractors are excluded from payroll costs.
- #16 – It clarifies that gross wages are included in payroll costs without considering employee federal tax withholding, and that employer federal taxes are excluded from payroll costs.
Please review the entire FAQ linked above or contact your JMF tax professional. We do expect more guidance like this for other outstanding issues.