Key Changes and Clarifications to SBA Payroll Protection Program

Dear Clients –

We hope this message finds you well and in good health as we continue to contend with the Coronavirus and its many challenges.  To keep our business clients informed of these fast-moving changes, we are writing to you on several clarifications The Small Business Administration (SBA) made to the SBA Payroll Protection Program last evening, April 2, 2020.

Key changes and clarifications include:

• Interest rate of 1.00% (change from .50%) on the loan
• Loan deferral period for repayment of 6 months, however interest will still accrue during this deferral period
• Payroll costs (please contact your lender for verification of the items below):
  • For the last 12 months prior to the application date, not calendar year 2019 $100,000 limit per employee is applied for compensation prior to the addition of health and retirement benefits for the employee
  • Independent contractors do not count as employees when an employer is determining its payroll costs
  • The payroll costs exclude the following Federal employment taxes imposed or withheld between 2/15/20 and 6/30/20:
    • Employee and employer FICA (Social Security and Medicare)
    • Employee Federal income tax withholding
  • Loan amount:
    • 2.5x average monthly payroll (as defined above) for prior 12 months, plus
    • Outstanding amount of an Economic Injury Disaster Loan (EIDL) less the “advance grant” portion

As you may know the guidelines related to this program are being continually updated and are subject to change.  We will alert you of changes as we become aware of them. We have updated our Small Business Administration Payroll Protection Program summary on the website for these modifications. Please click here

Davie Kaplan, CPA, P.C.

Jennifer R. Jones, CEO