PAYCHECK PROTECTION PROGRAM (PPP) Loan FAQs

In order to be eligible for a PPP Second Draw Loan, an entity must:

Not employ more than 300 employees;
Have used or will utilize its first PPP loan in its entirety;
Demonstrate a reduction in gross receipts of at least 25 percent in the first, second, or third quarter of 2020 relative to the same calendar quarter of 2019. Applications submitted on or after January 1, 2021 may use gross receipts from the fourth quarter of 2020.

Entities that are ineligible for a PPP Second Draw loan include:

Entities involved in political and lobbying activities (including engaging in advocacy in areas such as public policy or political strategy;
Entities affiliated with entities in the People’s Republic of China;
Registrants under the Foreign Agents Registration Act;
Entities receiving a grant under the Shutter Venue Operator Grant program; and
Entities listed in 13 C.F.R. 120.110 ineligible to receive SBA loans (except for nonprofits and religious organizations)

While borrowers may receive a loan up to 2.5 times their average monthly payroll costs in the one year prior to the loan or calendar year 2019, no loan can be greater than $2 million.

Additional terms include:

New entities may receive loans of up to 2.5 times the sum of their average monthly payroll costs.
Entities in the food services and accommodations industries (NAICS code 72) may receive loans of up to 3.5 times their average monthly payroll costs.
Affiliation rules that applied during the initial PPP loan are waived for the PPP Second Draw loan.
Eligible entities may only receive one PPP Second Draw Loan.
Seasonal employers may use a 12-week period between February 15, 2019 and February 15, 2020 to calculate their maximum loan amount.
Businesses with multiple locations eligible under the initial PPP requirements may not employ more than 300 employees per physical location.
With respect to loans of $150,000 or less, an entity may:

submit certification attesting that the entity meets the revenue loss requirements; and
on or before the date the entity submits their loan forgiveness application, produce adequate documentation that the entity met the revenue loss standard.

Veteran and non-profit organizations may utilize gross receipts as defined in Section 6033 of the Internal Revenue Code to make to the calculation to see if they meet the revenue loss standard.

PPP Second Draw loan borrowers will be eligible for loan forgiveness equal to the sum of (i) their payroll costs , (ii) covered rent, mortgage, and utility payments, (iii) covered operations expenditures, (iv) covered property damage costs, (v) covered supplier costs, and (vi) covered worker protection expenditures incurred during the covered period.

The 60/40 allocation between payroll costs and nonpayroll costs continues to apply.

Yes. The definition of payroll costs has been expanded to include group life, disability, vision and dental insurance costs.

Borrowers who returned part of their original PPP loan or did not borrow the full amount for which they were eligible may request a modification to increase their loan to the maximum amount.

Yes. Borrowers can pick any period between 8 and 24 weeks after the origination date of the loan.

The Consolidated Appropriations Act of 2021 (the CAA) provides that expenses related to PPP loans (including Second Draw PPP Loans) (i.e., payroll costs, interest on mortgage, utility payments, and rent that qualify under the CARES Act as well as other expenses now included under the CAA) are allowed for otherwise deductible expenses even if they are paid with the proceeds of a PPP loan that is forgiven. Furthermore, the tax basis and other attributes of a borrower’s assets will be not reduced as a result of loan forgiveness.

Yes. Where a business expected a PPP loan to be forgiven and it is not, the business will be able to deduct business expenses related to the PPP Loan.

Links to the Treasury Department’s revenue ruling and revenue procedure on the tax treatment of PPP Loan expenses can be found here: https://www.irs.gov/pub/irs-drop/rr-20-27.pdf and here https://www.irs.gov/pub/irs-drop/rp-20-51.pdf

The SBA considers there to have been a Change of Ownership of a PPP loan borrower if:

20% or more of the common stock or other ownership interest of the PPP loan borrower (including publicly traded entities) is sold or otherwise transferred, in one or more transactions (including to an existing owner of the entity or an affiliate); or
50% or more assets of the PPP loan borrower are sold or otherwise transferred in one or more transactions; or
the PPP loan borrower merges with another entity.

A PPP loan borrower must notify its PPP lender in writing prior to the closing of any Change of Ownership transaction of the contemplated transaction. The PPP loan borrower must provide the PPP lender with a copy of the proposed transaction agreements or other documents that would effectuate the transaction.

No. There are no restrictions on a Change of Ownership transaction if the PPP loan has already been back in full.

If the PPP loan has been completely forgiven, then there are no restrictions on a Change of Ownership transaction.

If the PPP loan has not been fully paid back or forgiven and an outstanding balance remains, SBA prior approval may be required for the Change of Ownership transaction.

SBA approval is not required if the Change of Ownership transaction is:

(i) a stock sale/merger if the sale or transfer is 50% or less of common stock or other ownership interest of PPP loan borrower; or

(ii) a stock sale/merger or asset sale (50% or more of assets) where PPP loan borrower completes forgiveness application reflecting use of all PPP loan proceeds and an interest bearing escrow account controlled by lender is establish with funds which equal the balance of the PPP loan. (Once the forgiveness process is complete, escrow funds are used to repay PPP Loan balance).

Otherwise, all other Change of Ownership transactions will require prior SBA approval.

A PPP loan lender must provide the following information with a request for approval of a Change of Ownership transaction to the appropriate SBA Loan Servicing Center:

Reason the PPP borrower cannot fully satisfy the PPP Note or escrow funds;
Details of the requested transaction;
A copy of the executed PPP note;
Any applicable letter of intent and the purchase/sale agreement that set forth the duties of the seller, buyer and PPP loan borrower;
Disclosure if the buyer has an existing PPP loan its SBA loan number; and
A list of any owners of 20% or more of the purchasing entity.

The SBA will complete its review and provide a determination within 60 calendar days of the approval request. The SBA may require additional conditions for in order for the transaction to be approved.

Yes. If a sale of assets is for 50% or more of the assets, the purchaser will have to assume all of the PPP loan borrower’s loan obligations and such obligation must be reflected in either (i) the purchase/sale agreement; or (ii) a separate agreement in which the purchaser assumes the PPP loan obligations.

Yes. For all stock sales, transfer and mergers, the PPP loan borrower (or its successor) remains subject to all PPP loan obligations, regardless of whether or not the transaction requires SBA approval.

The SBA can seek recourse against a new owner for the unauthorized use of PPP loan funds.

The PPP loan borrower and the new owner must segregate PPP loan funds and expenses for the separate loans and provide documentation to demonstrate compliance by each borrower with their separate loans.

The successor after a merger must segregate PPP funds and expenses and document compliance with both loans respectively.

Qualified Payroll costs: At least 60% of the Loan must be used for Payroll costs which include the following:

Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
Employee wages, salaries, commissions, cash tips or the equivalent (based on employer records of past tips or, if no such records available, a reasonable good-faith employer estimate of such tips) or similar compensations;
Payment for vacation, parental, family, medical or sick leave;
Allowance for separation or dismissal; and
Payment of state and local taxes assessed on employee compensation.

Qualified Payroll costs do not include the following:

Compensation for individuals with a principal place of residence outside the United States;

Individual compensation in excess of $100,000 (prorated if necessary). Recent guidance for the PPP Flexibility Act explains the pro-rated caps of income that can be considered for PPP loan forgiveness based on the $100,000 annual compensation limit. For employees during an 8-week covered period, the pro-rated cap is $15,385. For owners during an 8-week covered period, the pro-rated cap is the lower of either $15, 385 or the equivalent of 8 weeks of 2019 compensation. For employees during a 24-week covered period, the pro-rated cap is $46,154. For owners during a 24-week covered period, the pro-rated cap is the lower of either $20,833 or the equivalent of 8 weeks of 2019 compensation;

Federal employment taxes withheld between February 15, 2020 and June 30, 2020, including FICA and income tax withholdings;

Amounts paid to independent contractors (who can apply for their own PPP loans); and

Qualified sick and family leave wages for which a tax credit is allowed under the Families First Coronavirus Response Act (FFCRA).

Qualified Non-Payroll Costs: No more than 40% of Loan can be used for Non-Payroll Costs. Non-Payroll Costs include the following:

Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation) – incurred before February 15, 2020;

Rent (including rent under a lease agreement) in force before February 15, 2020;

Utilities (electricity, gas, water, internet, telephone, etc.), for which service began before February 15, 2020; and

Interest on any other debt obligations that were incurred before February 15, 2020.

Yes, The CARES Act allows for all or a portion of the PPP Loans to be forgiven; amounts forgiven are not includable in federal taxable income.

No, the employer may seek loan forgiveness once they have used the full amount of the PPP loan proceeds. Additionally, the employer does not have to wait to seek forgiveness until after the close of the covered period regardless of whether it selected the 24-week or 8-week period.

However, employers should keep in mind that if they apply for forgiveness before the end of the covered period and they have reduced any of their employees’ salaries or wages more than 25%, the employer must account for the excess salary reduction for the full 24-week or 8-week covered period.

The PPP originally provided employers with a “covered period” of 8 weeks starting on the loan origination date during which an employer could expend qualified payroll costs and other expenses that would be eligible for forgiveness. The Paycheck Protection Program Flexibility Act now in place extends the covered period to run from the date the loan originated and ending on the earlier of either: (i) the date 24 weeks after the loan origination date; or (ii) December 31, 2020. This extension allows employers who receive a PPP loan to have more time to improve its full-time employee count and thereby improve its eligibility for loan forgiveness.

However, if you already received a PPP loan prior to the enactment of the PPP Flexibility Act, please note that you can still use the original 8-week covered period as outlined below:

To determine whether adequate staffing levels have been maintained, the average number of full-time equivalent (FTE) employees per month during the 8-week period from the date of the loan will be compared to one of two time periods (at the employer’s election, either February 15, 2019 to June 30, 2019 or January 1, 2020 to February 29, 2020).

Extension of Covered Period For All Initial PPP Loans

The Consolidated Appropriations Act of 2021 (the CAA) has extended the covered period of all initial PPP loans through March 31,2021.

Example: If you had 30 FTE employees from February 15, 2019 to June 30, 2019 and 20 FTE employees from January 1, 2020 to February 29, 2020, you would more than likely choose the latter time period as it may be more advantageous.

If the number of FTEs during the 8-week period following the loan disbursement is lower than the time period chosen, the amount of loan forgiveness may be reduced proportionately.

Note: Seasonal employers may compare the average FTE employees per month during the 8-week period from the date of the loan to the period beginning February 15, 2019 and ending on June 30, 2019.

The SBA has issued guidance to make clear that, as long as the company has made a good faith, written offer of rehire at the same salary/wages and for the same number of hours, the employee’s rejection of that offer will not result in a reduction of the loan forgiveness amount. You must document the employee’s rejection of the rehire offer and retain all documents/correspondence and inform the applicable state unemployment insurance office of such an employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer.

Employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation. Template forms for Return to Work and Confirmation of Verbal Resignation letters can be found in the Engage Forms Library, here.

More information on unemployment compensation disqualification for failing to return to work can be found in the Unemployment Insurance FAQs, here.

The PPP Flexibility Act provides that borrowers shall use at least 60% of the covered loan amount for payroll costs. The word “shall” indicates this is a minimum threshold and if not met, none of the loan is eligible for forgiveness. However, Treasury recently released a statement that if an employer uses less than 60% of a PPP loan for eligible payroll costs during the forgiveness covered period, the employer will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for eligible payroll costs. This issue may be subject to further clarification from SBA/Treasury.

You can apply for loan forgiveness through your lender. The lender has 60 days to make a decision on loan forgiveness. It is expected that there will be a formal loan forgiveness application to be submitted to the lender.

An employer seeking PPP loan forgiveness from its lender should:

Utilize 100% of the PPP loan funds over the covered period following receipt of loan proceeds;
Document how all PPP loan proceeds were spent;
Spend at least 60% of the PPP loan proceeds on Payroll costs (defined in a previous question on this page);
Spend no more than 40% on qualified Non-Payroll costs (defined in a previous question on this page);
Maintain Pay and Staffing Levels per guidelines; and
Correct any staffing level reductions if applicable.

The SBA is currently offering PPP loans until May 31, 2021. It’s recommended that you work with your lender to allow enough time for the SBA to review your application before the deadline. The SBA may not accept new lender applications for first draw or second draw PPP loans submitted after May 31. Also note that Monday, May 31, is Memorial Day (the last business day before the application is Friday, May 28). The SBA will then have until June 30 to process and approve applications submitted by the application deadline.

A link to the SBA PPP loan application (Borrower Application Form) is located on the treasury.gov website here: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses Look under "For Borrowers."
If needed, Engage also has created a letter for clients to provide to the SBA or your approved lender which can be found here and on the COVID-19 Client Resources Page.

No. Previous applicants are in the queue. The status of your application depends upon various factors including whether your application is complete and accurate, and/or how your lender may be prioritizing loan applications.

The proceeds from the loan can be used when they are received. However, only proceeds used during the covered period following the receipt of funds may be considered for forgiveness.

The covered period begins on the day the funds are deposited into the business’ bank account. It is important to note that business closure does not impact the covered period.

No. SBA rules require the money be spent prospectively.

PPP loan funds can qualify for forgiveness if they are used for the following purposes:

payroll costs;
payments of interest on a mortgage that was incurred prior to February 15, 2020;
utility payments for services which began prior to February 15, 2020; and
rent paid on a lease obligation that started prior to February 15, 2020.

The actual amount of loan forgiveness will depend upon the total amount of the items set forth above that an employer pays over the covered period following the date of the loan. No more than 40% of the loan forgiveness may be attributable to non-payroll costs. Thus, at least 60% of the forgiven amount must be used for "payroll costs". (See the following question and answer for how "payroll costs" are defined under a PPP loan).

Payroll costs consist of compensation to employees in the form of:

salary, wages, commissions or similar compensation, cash tips or equivalent (based on records of past tips or reasonable good faith estimates of tips);
vacation pay;
pay for medical or sick leave;
severance pay;
payment for provision of employee group health care coverage (including insurance premiums); and
state and local taxes assessed on employee compensation.

The following will not be considered “payroll costs” under a PPP loan and will not be eligible for forgiveness:

compensation for individuals whose principal place of residence is outside the United States;
individual compensation in excess of $100,000 per year (prorated if necessary);
federal employment taxes required to be withheld between February 15, 2020 and June 30, 2020 (including FICA and income tax withholdings);
sick leave pay and family leave pay that an employer takes tax credits for under the Families First Coronavirus Response Act; and
monies paid to independent contractors (i.e., 1099s) since such individuals can apply for their own PPP loans from the SBA.

No. The exclusion of compensation exceeding $100,000 annually only applies to cash. Employer contributions to defined-benefit or defined-contribution plans, payment for group health care coverage (including insurance premiums), and payment of state and local states on employee compensation do not count toward the exclusion of compensation in excess of an annual salary of $100,000.

PEO administrative fees and workers’ compensation insurance costs do not qualify as “payroll costs.” Under the current guidance from the SBA, the administrative fees of a professional employer organization such as Engage as well as workers’ compensation insurance costs are not included within the SBA definition of "payroll costs” for PPP loan purposes.

Based upon current guidance, the amounts eligible for forgiveness under a PPP loan can be reduced if:

1. An employer reduces the average number of employees during the covered period following the origination date of the loan; and/or

2. An employer reduces the wages paid to its employees.

No, the portions of PPP loan funds that are forgiven are not taxable to a business.

The SBA and Treasury have now issued guidance that any borrower (including its affiliates) receiving PPP loans with an original principal amount of less than $2 million dollars collectively will automatically be deemed to have made the application’s required certification regarding financial necessity due to economic uncertainty in good faith. SBA and Treasury decided upon the $2 million loan principal threshold because borrowers with loans less than the threshold principal amount typically have less access to other sources of liquidity in the current economic environment.

SBA and Treasury clarified that borrowers of PPP loans with principal greater than the $2 million principal threshold may still have an adequate basis necessary for the good faith financial necessity due to economic uncertainty certification for their loan based on their individual circumstances. All loans above the $2 million principal threshold will be subject to review by the SBA for compliance.

In the event the SBA determines that a borrower lacked an adequate basis for certification of their economic uncertainty, the SBA will seek repayment of the outstanding PPP loan balance and inform the lender the borrower is ineligible for loan forgiveness. The SBA will not pursue any administrative enforcement or make referrals to other agencies against such borrowers who repay the loan after receiving SBA notification.

Even if the SBA does determine that a borrower did not have an adequate basis to make their certification of financial necessity due to economic uncertainty, the PPP loan is still guaranteed by the SBA.

Yes. The PPP reduced the amount of loan that could be forgiven if an employer failed to maintain its full-time employee (FTE) count after receiving the loan. However, the PPP originally had a “Safe Harbor” provision that allowed an employer to avoid the reduction in loan forgiveness if (i) the employer’s FTE count in the pay period inclusive of February 15, 2020 was greater than the employer’s total average FTE between February 15, 2020 and April 26, 2020 and (ii) the employer’s total FTE as of June 30, 2020 was greater than or equal to the employer’s total FTE in the pay period that includes February 15, 2020.

The PPP Flexibility Act has expanded the PPP FTE Reduction Safe Harbor by allowing it to apply if (i) the employer’s total FTE in the pay period which includes February 15, 2020 was greater than the employer’s total average FTE between February 15, 2020 and April 26, 2020 and (ii) the employer’s total FTE as of December 31, 2020 was greater than or equal to the employer’s total FTE in the pay period that includes February 15, 2020.

By extending the Safe Harbor time period that the Safe Harbor reviews the employer’s total FTE count from June 30, 2020 to December 31, 2020, the Act provides employers with more time to hire more employees and avoid potential loan forgiveness reduction.

Yes. The PPP reduced the amount of loan forgiveness an employer could receive if the employer reduced its employees’ salaries and/or wages after receiving the loan. The original PPP wage and salary reduction Safe Harbor allowed an employer to avoid a reduction in loan forgiveness if (i) an employee’s annual salary/wage as of February 15, 2020 was greater than that same employee’s average annual salary/hourly wage between February 15, 2020 and April 26, 2020 and (ii) an employee’s annual salary/ hourly wage as of February 15, 2020 was less than or equal to that same employee’s average annual salary/hourly wage as of June 30, 2020.

The Act has expanded the PPP wage and salary reduction Safe Harbor by allowing it to apply if (i) an employee’s annual salary/hourly wage as of February 15, 2020 was greater than that same employee’s average annual salary/hourly wage between February 15, 2020 and April 26, 2020 and (ii) an employee’s annual salary/hourly wage as of February 15, 2020 was less than or equal to that same employee’s average annual salary/hourly wage as of December 31, 2020.

By extending the Safe Harbor time period that t reviews the employer’s salary/wage levels from June 30, 2020 to December 31, 2020, the Act provides employers with more time restore any reduced salary/wages that were reduced between February 15, 2020 and April 26, 2020) to pre-COVID-19 levels to avoid potential loan forgiveness reduction.

Yes. In order to maintain loan forgiveness eligibility, PPP regulations originally required an employer to spend at least 75% of the loan proceeds on eligible payroll costs.

The PPP Loan program now allows an employer to maintain loan forgiveness if they use at least 60% of the covered loan for eligible payroll costs and up to 40% for payment on eligible mortgage, rent, or utility payments.

In addition to the Safe Harbor discussed above, the PPP Flexibility Act provides that FTE reduction will not apply to an employer’s PPP loan forgiveness if the employer can document in good faith (i) an inability to rehire individuals employed on February 15, 2020 and (ii) an inability to similarly qualified employees for unfilled positions on or before December 31, 2020; or alternatively, is able to document inability to return to the same level business activity at which it was operating before February 15, 2020 to due to compliance with requirements or guidance issued by OSHA, CDC or HHS between March 1, 2020 and December 31, 2020 relating to COVID-19 issues (i.e., sanitation, social distancing, worker/customer safety).

It is imperative that employers clearly document and maintain the documents showing their efforts to return employees to work; their inability to rehire former employees; their inability to hire new employees to replace those former employees they are unable to rehire; and their inability to resume a pre-COVID-19 level of business activity due to compliance with governmental guidelines in order to maximize their PPP loan forgiveness.

Please contact your HR Consultant if you have questions or need further guidance.

Yes. The PPP Flexibility Act did change the loan maturity periods. Treasury/SBA regulations originally provided that PPP loans would have a 2 year loan period/maturity date.

The Act now provides that a PPP loan that has a balance remaining after forgiveness will have a minimum maturity of 5 years and a maximum maturity of 10 years from the date the employer applies for loan forgiveness. Currently, it appears that the extended maturity date only applies for loans made after the enactment of the Act. It is unclear if Treasury and/or lenders will reform the terms of existing PPP loans to reflect the maturity extension seen in the Act.

Treasury/SBA guidance originally provided that deferral would only apply for a fixed 6 month period following the disbursement date of the PPP loan.

The PPP Flexibility Act now requires lenders to allow for deferral until the date on which the amount of loan forgiveness is remitted to the lender. However, if an employer who received a PPP loan does not apply for forgiveness within 10 months after the close of the Loan Forgiveness Covered Period (which the Act defines as the date the loan originated and ending on the earlier of either: (i) the date 24 weeks after the loan origination date; or (ii) December 31, 2020), then payments of principal, interest and fees on the loan must begin no earlier than that date.

The CARES Act allows employers to defer the deposit and payment of the employer’s share of Social Security taxes that would otherwise be required between March 27, 2020 and December 31, 2020. However, under the CARES Act, once an employer has a PPP loan forgiven, then Social Security deposits and payments due after that date are no longer eligible for deferral.

The PPP Flexibility Act changes the CARES Act rules on deferral. Now, even if an employer applies for and receives forgiveness on some or all of its PPP loan, the employer will remain eligible for the CARES Act Social Security tax deferral program.

If an employer makes a good faith, written offer to restore an employee’s reduced hours (for the same salary/wages and number of hours in the last pay period prior to a reduction of hours), and the employee rejects the offer, such an employee will not count against an employer’s FTE reduction factor for loan forgiveness. It is critical that the employer maintain records documenting their offer and the employee’s rejection.

Yes. According to recent guidance for the PPP Flexibility Act, any applicable state unemployment insurance office must be informed of an employee’s rejected rehire offer within 30 days of the rejection.

Clients should use the forms available in the Engage Forms Library to document their efforts to rehire employees, and provide documentation of their rehire efforts to their Account Managers. This will allow Engage to inform state unemployment offices of employee rehire rejections.

It is critical that employers maintain records documenting their rehire offers and employee rejections and provide such records to Engage to allow Engage to inform the unemployment offices in a timely fashion.

Once an employer has filed an application for forgiveness, the lender is responsible for notifying the employer of the SBA’s remittance of the loan forgiveness amount or the SBA’s determination that the none of the loan is eligible for forgiveness, as well as the first loan payment due date if applicable.

If an employer fails to apply for forgiveness within 10 months after the close of the Loan Forgiveness Covered Period (which the PPP Flexibility Act defines as the date the loan originated and ending on the earlier of either: (i) the date 24 weeks after the loan origination date; or (ii) December 31, 2020), the lender must notify the employer of the date the first payment of principal, interest and fees is due.

Although some lenders may ask for Forms 941 for purposes of underwriting the PPP loan, the SBA does not require lenders to use any tax information, such as a Form 941, for purposes of underwriting your loan.

The SBA makes clear in its interim final rule (SBA IFR) that lenders are not limited to tax forms or records in the types of documentation they can use to determine your eligibility for a PPP loan, and the amount of such loan. Specifically, the SBA IFR provides as follows:

Borrowers must submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099-MISC, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount. (SBA IFR section 3.b.(iv).II.

In addition, the Department of the Treasury added to its website an updated FAQ (look under "Program Rules") that includes a specific reference to PEO clients to clarify that lenders do not need 941s or other tax documents from a PEO client in order to qualify for a PPP loan.

It may be helpful if you provide this language to the lender and request that the lender use documentation such as payroll records to confirm your eligibility for a PPP loan. You may also provide a lender this letter prepared by Engage.

Engage clients can generate reports from the data in the Manager Portal including the following:

Payroll Check Journal Report: This report provides a grand total of all payroll related items by employee.

Quarterly Tax Summary: This report provides totals by year and quarter.

Benefits Billing Detail Report: This report provides only Benefits related information in the

even a separate report is needed.This data also can be found on the Payroll Check Journal Report.

Payroll Retirement Contributions Report: Generate this report if a separate report showing Retirement is needed. This data also can be found on the Payroll Check Journal Report.

Employee Hours by Month Report: This report will assist in determining the number of employees paid in a specific year and month.

Instructions for running these reports can be downloaded here.

Given the dynamic situation, information and guidance from the SBA and other federal agencies is constantly being updated. To ensure you are referencing the latest information, documents and forms, reference the SBA website and/or the Treasury websites directly.

Engage also regularly updates its internal COVID-19 Client Resources information pages with links to these sites.

It can get confusing with all of the terms and acronyms being used. While both loans are authorized by Section 7(a) of the Small Business Act (as amended by the CARES Act) and are meant to help businesses hurt by the COVID-19 pandemic, an EIDL is not the same as a PPP loan in many key areas. One of the biggest differences is that, under certain conditions, some (or all) of the PPP loan IS forgivable while EIDLs are not forgivable (although eligible applicants for an EIDL can receive a $10,000 emergency grant within three days of application).

The amount of a PPP loan that is forgivable may not be comprised of more than 25% of non-payroll (but otherwise qualifying) costs. Such costs would include certain qualifying payments for rent, utilities, and mortgage interest. The amount that is eligible for forgiveness is generally reduced if the employer reduces headcount or reduces an employee’s total salary or wages. EIDLs have no such provisions for forgiveness.

Other differences between EIDL and PPP loans: PPP loans are primarily meant to help businesses with "payroll costs," which include certain wages, benefits, and state and local taxes, as well as to help with payments on mortgage interest, rent, utilities, and interest on pre-existing loans. EIDLs, on the other hand, are meant to provide working capital and can be used to pay fixed debts, accounts payable, and other similar bills, as well as the items covered under PPP loans.

Their covered periods and loan caps are different as well. COVID-19 EIDLs are available for economic injuries that occurred between January 31, 2020 and December 31, 2020 and are capped at $2,000,000, while PPP loans only cover costs incurred from February 15, 2020 through June 30, 2020 and are capped at the lesser of 2.5 times the average monthly total of "payroll costs" or $10,000,000.

So, what happens if you need a PPP loan but have already received an EIDL? If you received an EIDL loan between January 31, 2020 and April 3, 2020, you can still apply for and receive a PPP loan. To prevent “double dipping,” EIDL funds cannot be used for "payroll costs" or other PPP allowable uses if you want to qualify for both. HOWEVER, even if you used some of the EIDL's funds for PPP purposes, you may still be able to "refinance" those amounts into the PPP loan during the application process and then be able to seek forgiveness on certain of the PPP loan proceeds (because the qualifying costs incurred during the life of the EIDL would now relate to a PPP loan versus an EIDL).

The CARES Act allows seasonal employers to determine their maximum PPP loan amounts by referring to their average total monthly payroll payments for either:

the 12-week period beginning February 15, 2019, OR
the period starting March 1, 2019 and ending June 30, 2019.

Under the Treasury Department’s interim final rule, seasonal employers alternatively may elect to determine their maximum loan amounts as the average total monthly payroll payments during any consecutive 12-week period between May 1, 2019 and September 15, 2019.

Yes, you may still apply for a PPP loan.

Seasonal employers will be considered to have been in operation as of February 15, 2020 if they were in operation during any 8-week period between May 1, 2019 and September 15, 2019.

Any lender authorized to offer PPP loans may offer PPP loans to eligible seasonal employers. PPP loans for seasonal employers are guaranteed by the SBA just as PPP loans are for non-seasonal employers.