SBA Paycheck Protection Program Loan Guidance: Three Things to Consider
Change in Interest Rate
The interest rate on the loan is now 1% vs the 0.5% from April 2, 2020, which is down 4% from the CARES Act.
Change NOT to include Independent Contractor payments in the loan calculation
A business cannot use independent contractors in its calculation of payroll costs for purposes of the loan calculation. This guidance is in direct contrast to the CARES Act which created the loan.
If you included independent contractors in your payroll calculation for purposes of determining the loan amount, you should update the calculation.
- If you have not already filed for the SBA loan – remove the contractor pay from the calculation.
- If you have filed, retract your application and update accordingly.
- If you are unable to retract your current application – reach out to your banker to have them modify.
Caution: Do not submit duplicate applications or you will delay processing.
Change for the loan forgiveness calculation
In order to qualify for loan forgiveness, wages paid during the 8 week period following receipt of the loan now have to be no less than 75% of the loan forgiveness.
We are closely monitoring this evolving and unique economic situation. We will keep you updated and informed on how to respond to these and additional tax and regulation changes as they are announced.
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.