The Paycheck Protection Program, a key part of the Coronavirus Aid, Relief and Economic Security, or CARES Act is intended to help the United States 30 million small businesses keep their employees on the payroll.
The federal program offers loans of up to $10 million to employers with 500 workers or less in each physical location. In order to keep employees throughout the crisis, these loans can cover up to eight weeks of payroll, mortgage and rent payments and utilities.
Our Payroll and HR experts have reviewed the Small Business Administration (SBA) interim final rules (IFR), published on April 2, regarding the Paycheck Protection Program (PPP). The good news is that the language was revised to offer additional flexibility with regards to the documentation that will be needed to establish a company’s eligibility for a PPP loan. The highlights from the IFR are included below:
The IFR states that the company “must submit such documentation as is necessary to establish eligibility such as payroll processor records, [or] payroll tax filings…” Moreover, the IFR goes on to state, “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.”
Elsewhere in the IFR it also expressly states that “each lender’s underwriting obligation under the PPP is limited to effectively (i) confirming receipt of the applicant’s certifications, (ii) confirming receipt of information demonstrating the applicant was a going concern on or around February 15, 2020, and (iii) confirming the dollar amount of average monthly payroll costs for the preceding year by reviewing the payroll documentation submitted with the borrower’s application.” In other words, PPP lenders’ ability to request documentation outside of items strictly necessary to confirm payroll is very limited.
The IFR also provides that a lender may rely on a borrower’s attestation and supporting documentation with respect to amounts for which the borrower seeks loan forgiveness. This should ease the process for client employers in seeking and obtaining loan forgiveness.
Revised language indicates that lenders can confirm the eligible loan amount using the “required documents” as set forth in the IFR, such as payroll records, bank statements, etc. Tax documents (such as Forms 941) are not required to be provided to lenders to qualify for the loans.
Key Information for Fourth PEO Customers
- The SBA further revised the actual PPP loan application to eliminate some of the language that was problematic for clients in a PEO relationship seeking a PPP loan.
- PPP lenders should accept payroll reports provided by PEOs in support of their client company’s PPP application.
- PEO customers can log in to their Fourth Manager Portal to access the Client Allocation Report (search by report name). From there you can run the required annual payroll cost report to determine the average annual payroll cost for the loan application.
- PEO customers should have received a letter that briefly describes the PEO relationship and may be used to confirm for the lender that the PEO will be providing the necessary wage information. Please reach out to your Client Solutions Manager if you have any questions.
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