Tax Alert: Treasury and SBA Issue
Additional Guidance on PPP Loans
April 9, 2020 - The Small Business Administration (“SBA”), in consultation with the U.S. Treasury Department, issued a series of FAQs designed to provide clarification regarding the implementation of the Paycheck Protection Program (“PPP”) established in the Coronavirus Aid, Relief, and Economic Security Act (“CARES”). Both borrowers and lenders may rely on the guidance as the SBA’s interpretation of the CARES Act and PPP Interim Final Rule that was issued last week.

Some of the key questions addressed in the FAQ:

  • A business with more than 500 employees may still qualify for an SBA loan if it otherwise satisfies existing statutory and regulatory requirements to qualify as a “small business concern”.
  • Businesses must apply the SBA affiliation rules for related entities in order to qualify as a “small business concern”.
  • The excess of $100,000 payroll exclusion under the CARES Act applies only to salaries and wages and not to non-cash benefits, such as employer contributions to retirement plans and group health care premiums.
  • Payments for employee vacation, parental, family, medical and sick leave are eligible payroll costs for PPP loans. However, sick and family leave wages for which an employment tax credit is allowed under the Families First Coronavirus Response Act (“FFCRA”) are excluded.
  • Payments made to independent contractors or sole proprietors are excluded from the eligible payroll calculations.
  • Payroll costs are determined on a gross basis (without regard to subtractions or additions for Federal taxes imposed or withheld) for purposes of applying the provisions of the CARES Act.
  • Only the employer portion (and not the employee portion) of FICA and other Federal payroll taxes should be excluded from the loan amounts.
  • The eight-week loan forgiveness period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The first disbursement must be made no later than ten calendar days after the loan approval date.

The complete list of FAQs can be accessed at:

The FAQs will be updated on a regular basis and Whitley Penn will send additional information as relevant updates are made by the Treasury Department.
Whitley Penn is continually monitoring the tax and economic developments related to the Coronavirus pandemic and will send out additional alerts in the future.  In the interim, please contact your Whitley Penn Tax Advisor if you have any questions or require any additional information.