December 11, 2020

Highlights for Dept. of Treasury and SBA’s PPP Loan Frequently Asked Questions

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On April 6, 2020, in a joint effort, the Department of the Treasury and the U.S. Small Business Administration (SBA) released Frequently Asked Questions (FAQs) pertaining to the Paycheck Protection Program (PPP)—the $349 billion relief program stemming from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The FAQs offer much-needed clarification on various PPP provisions, but we highlight three of the most significant ones here:

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  • Although the CARES Act’s definition of “payroll costs” excludes compensation in excess of annual salary of $100,000 – the exclusion only applies to cash compensation. Thus, non-cash benefits are not included, such as:
  • retirement benefits;
  • healthcare; and
  • payment of state and local taxes assessed on compensation of employees. ¹
  • Generally, borrowers’ aggregate payroll costs calculation will use data either from the prior 12 months or from calendar year 2019.  In the case of seasonal businesses, the calculation uses average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019.  The guidance further states that 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. ²
  • The gross payroll approach will be used for both loan application and forgiveness. ³

Significantly, the new guidance reminds borrowers and lenders that they may rely on this guidance “as SBA’s interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rule.” Furthermore, the guidance indicates that the government will refrain from challenging lender PPP actions that conform to this guidance, the Paycheck Protection Program Interim Final Rule, and any subsequent rule-making effective at the time.


  1. Treasury and SBA FAQ #7 at:
  2. Id., FAQ #14.
  3. Id., FAQ #16.
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