Last night, the Treasury Department released a series of frequently asked questions to clarify certain provisions of the Paycheck Protection Program (“PPP”) to applicants.
- For the purposes of calculating payroll costs and headcount, there was ambiguity about the correct time period that should be used. The clarification allows an applicant to use either the calendar 2019 period OR the latest 12 months ended prior to the filing of the application. Applicants should review their calculations to determine whether or not there might be an advantage given to one period or another.
- There has been a great deal of confusion surrounding whether or not the $100,000 salary cap included or excluded non-salary benefits, such as contributions to retirement plans or group benefit insurance payments. The update now clarifies that once a salary cap has been reached, additional amounts for these non-salary benefits may be additive to $100,000 in salary.
- Example 1: Employee A has a salary of $175,000 and additional attributable benefits of $25,000. For the purposes of the application, Employee A’s payroll cost calculation would then be $100,000 (salary subject to the cap) + $25,000 (benefits) = $125,000
- Example 2: Employee B has a salary of $90,000 and additional attributable benefits of $15,000. For the purposes of the application, Employee B’s payroll cost calculation would then be $90,000 + $15,000 = $105,000
- There is additional clarification surrounding number of employees that must be analyzed on a case-by-case basis to see if the NAICS code qualifies the eligibility of an applicant.
If an applicant has already filed with a lender for a PPP, the applicant can update its application to reflect the above.
Please reach out to our COVID-19 Response Team with any questions you might have.