Billions of dollars of loan applications are being processed by qualified lenders participating in the SBA Paycheck Protection Program (PPP).  The SBA and Treasury are still addressing areas of uncertainty for lenders and borrowers.  As discussed in our prior post, the SBA is responding to their most frequently asked questions on their FAQ page that will be updated on a “regular basis.”

CLICK HERE  for the SBA FAQ page.

An April 6th, 2020 updated added 17 new questions and answers to the page.  We suggest you review this page regularly during the PPP application process.

Below are SBA responses from the recent update that resolve some of the most frequently asked questions we have had from potential applicants. 

Question: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value?

Answer: No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:

  • employer contributions to defined-benefit or defined-contribution retirement plans;
  •  payment for the provision of employee benefits consisting of group health care coverage,
  • including insurance premiums; and assessed on compensation of employees


Question: What if an eligible borrower contracts with a third-party payer such as a
payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes?

Answer: SBA recognizes that eligible borrowers that use PEOs or similar payroll
providers are required under some state registration laws to report wage and other data on As of April 6, 2020 the Employer Identification Number (EIN) of the PEO or other payroll provider.

In these cases, payroll documentation provided by the payroll provider that indicates the amount of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s employees will be considered acceptable PPP loan payroll documentation.

Relevant information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly Federal Tax Return, should be used if it is available; otherwise, the eligible borrower should obtain a statement from the payroll provider documenting the amount of wages and payroll taxes. In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.


Question: What time period should borrowers use to determine their number of
employees and payroll costs to calculate their maximum loan amounts?
As of April 6, 2020

Answer: In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.

Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months).