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CARES Act: Treasury Department Issues FAQs for SBA's Paycheck Protection Program
Practical Law Legal Update w-024-9165 (Approx. 4 pages)
CARES Act: Treasury Department Issues FAQs for SBA's Paycheck Protection Program
by Practical Law Finance
| Published on 07 Apr 2020 • USA (National/Federal) |
On April 6, 2020, the US Treasury Department issued Frequently Asked Questions (FAQs) about the Small Business Administration's (SBA) Paycheck Protection Program (PPP) created under Title 1 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136 (H.R. 748)).
On March 27, 2020, the US Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136 (H.R. 748)), which President Trump signed into law, effective immediately. The CARES Act is the third major piece of legislation enacted in response to the COVID-19 outbreak in the US and is intended to provide economic relief to individuals and businesses facing economic hardship due to the outbreak. Under the CARES Act, the Small Business Administration (SBA) is offering loans under the Paycheck Protection Program (PPP) (Sections 1102 and 1106) and Economic Injury Disaster Loan Program (EIDL) (Section 1110).
On April 2, 2020, the SBA issued an interim final rule (IFR) outlining the key provisions for implementing the PPP which was effectively immediately.
On April 6, 2020, the US Treasury Department (Treasury) issued Frequently Asked Questions (FAQs) about the Paycheck Protection Program loans.
The Treasury stated that the SBA will provide timely additional guidance to address borrower and lender questions concerning the implementation of the PPP. Borrowers and lenders may rely on the guidance provided in the FAQs and the US government will not challenge any lender PPP actions that conform to the guidance in the FAQs, the IFR and any subsequent rulemaking in effect at the time.
The FAQs include questions and answers on:
- Lender responsibilities for verifying borrower information and use of own on-line portals and forms.
- Attribution rules and eligibility requirements for borrowers.
- Time periods and calculations for payroll costs and headcount.
- Annual employee compensation over $100,000.
- Paid sick leave as part of payroll costs.
- Calculations for seasonal businesses.
- Use of third-party payers to process payroll and report payroll taxes.
- Authorized signers for PPP loans.
- Effect of felony crimes on borrower eligibility.
- Ability to amend PPP loan application for updated FAQs.
- FinCEN Rule CDD and beneficial ownership rules for existing customers.
The FAQs will be updated on a regular basis. Borrowers and lenders should watch for further updates to the FAQs.
For a summary of the SBA PPP, see CARES Act: Stimulus for Small Businesses Under the SBA Checklist.
For additional guidance from the Treasury Department, see: