In The Know – PPP.pdf

The Small Business Administration (SBA) provides guidance on the Paycheck Protection Program (PPP), established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The guidance addresses borrower and lender questions, including eligibility, affiliation rules, and payroll costs. Key points include:
- Lenders are not required to replicate borrowers' calculations of payroll costs, but must perform a good faith review.
- Small business concerns can be eligible borrowers even if they have more than 500 employees, as long as they meet the SBA's size standards.
- Businesses with 500 or fewer employees, or those that meet SBA size standards, are eligible for PPP loans, as are certain nonprofit organizations and Tribal business concerns.
- Borrowers must apply SBA's affiliation rules, but lenders can rely on borrowers' certifications.
- The affiliation rule based on ownership does not apply if a minority shareholder irrevocably gives up certain rights.
- The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not non-cash benefits.
- PPP loans cover payroll costs, including paid sick leave, but exclude qualified sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act.
- Seasonal businesses can be eligible for PPP loans, even if they were not fully operational on February 15, 2020.