SBA explains how to calculate PPP loans, other issues
The U.S. Small Business Administration (SBA) released advice on how to calculate Paycheck Protection Program (PPP) loan amounts by type of business and other issues shortly before resume on Monday the acceptance of PPP requests from participating lenders.
Last week, the Paycheck Protection Program and the Healthcare Improvement Act, PL 116-139, passed a $ 310 billion replenishment of the P3 program after the initial $ 349 funding was exhausted. billion dollars in just 12 days. PPP loans are available for small businesses that were in operation on February 15 with 500 or fewer employees, including nonprofits, veterans organizations, tribal groups, self-employed workers, individual businesses and independent contractors. Businesses with more than 500 employees in certain industries can also apply for loans, according to the SBA and the Treasury.
Information published friday on how to calculate maximum loan amounts includes questions and answers aimed at:
- Self-employed without employees.
- Self-employed with employees.
- Self-employed people who report income on IRS Form 1040, Schedule F, Profit or loss of agriculture.
- S corporations and C corporations.
- Eligible non-profit organizations.
- Nonprofit religious institutions, veterans organizations and eligible tribal businesses.
- LLC owners (whose instructions vary depending on whether they are filing as a sole proprietorship, partnership, or corporation).
The SBA also added questions 32 to 35 on Friday and question 36 on Sunday to a PPP Q&A document first published on April 3. The new question-and-answer guide:
- Indicates that the cost of a housing allowance or allowance paid to an employee as part of the compensation counts as part of the salary costs, subject to the annual compensation limit of $ 100,000 per employee.
- Explains that P3 applicants and lenders may consider the principal residence rules in O. Reg. Second. 1.121-1 (b) (2) to determine whether an employee’s primary place of residence is in the United States.
- Addresses eligibility for PPP loans from agricultural producers, farmers, ranchers and agricultural cooperatives and others.
- Indicates whether all employees or only full-time equivalent employees should be used to determine eligibility below the 500 employee threshold established for the PDP.
Treasury also issued additional tips to meet the needs of seasonal employers. For the purpose of calculating the maximum loan amount, seasonal employers were initially allowed to use their monthly average payroll for the period February 15, 2019 to June 30, 2019 or March 1, 2019 to June 30, 2019. After further consideration, the treasury has determined that many seasonal employers have seasons later in the year. Seasonal employers are now allowed to use another base period, in particular any consecutive 12-week period between May 1, 2019 and September 15, 2019.
the AICPA Paycheck Protection Program Resources Page houses resources and tools produced by the AICPA to help cope with the economic impact of the coronavirus.
For more information and stories on the coronavirus and how CPAs can handle the challenges of the outbreak, visit the JofAon the Coronavirus Resources page or subscribe to our email alerts for the latest P3 news.
– Ken tysiac ([email protected]aicpa-cima.com) is the JofAeditorial director of. Jeff drew, a JofA editor, contributed to this article.