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CARES Act – Paycheck Protection Program Interim Final Rule Issued

Last night the US Treasury released interim final guidance on the recently enacted CARES Act Paycheck Protection Program (PPP) loan provisions. TBC wanted to share our latest takeaways from this final guidance.

  1. The loan application is on a first come first serve basis, we recommend applying with your bank as soon as possible. Banks will begin accepting applications on Friday, April 3rd.
  2. The Interest Rate has changed to 1%, which is an increase from the initial 0.5% rate announced earlier this week.
  3. The term of the loan has changed to 2 years, which is a decrease from 10 years communicated earlier this week.
  4. Your application should include quarterly payroll Forms 941 as well as any supporting documentation used to calculate the payroll costs used to compute the total loan proceeds needed. You should speak with your bank regarding whether other documentation is needed to approve your application.
  5. For those businesses that pay independent contractors you may not include those payments made to the independent contractors on Form 1099-MISC in your payroll costs for purposes of determining the loan amount.
    1. However, if you are an independent contractor or sole proprietor you can use the income you received on Forms 1099-MISC for purposes of submitting your own PPP loan application.
  6. 75% of all loan proceeds, at a minimum, must be used for eligible payroll costs to meet loan forgiveness requirements. The remaining proceeds may be used  for mortgage interest, rent, and/or utilities not to exceed 25% of loan proceeds received.
  7. Total payroll costs per eligible employee cannot exceed $100,000.

For more information you may visit the US Treasury website at: https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses

We wish all of you continued health in these difficult times and express our sincerest hopes that we’ll get through this together and come out stronger for it.

Disclaimer: This post was current as of the date of posting.  Any changes made to the law or regulations since original posting has not been incorporated.  Please view the recent postings for current information or contact us directly with any questions.