Paycheck Protection Program Guidance Released

The United States Treasury and Small Business Administration (SBA) issued guidance late in the day on April 2, 2020 updating and clarifying certain portions of the CARES Act Payroll Protection Program. Although there are still many gray areas of the CARES Act, we believe the following points noted in the update are important:

  • A fixed interest rate of 1.0% per annum and a maturity term of 2 years.
  • Independent contractors are NOT counted as employees for the purposes of the PPP loan calculation and therefore payments made to them are NOT included in payroll cost.
  • The loan is first come first serve for small businesses.
  • Federal employment taxes imposed or withheld between February 15, 2020, and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees, are excluded from the calculation. This limits these to only the amounts imposed or withheld between February 15, 2020, and June 30, 2020. These amounts will be a reduction of payroll cost but only for this selected time. There still may be further guidance issued for clarifying this issue.

View the full text of the rules.

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