Paycheck Protection Program FAQs by Topic

Who is eligible to participate in the Paycheck Protection Program?

Eligible recipients include small businesses and 501(c)(3) nonprofits that employ less than 500 employees, or less than the normal size standard that the SBA uses for the applicant’s primary industry (determined by NAICS number). For example, for NAICS number 332322—Sheet Metal Work Manufacturing, the normal SBA size standard is also 500 employees, but some industries have different size standards. A business can qualify for a PPP loan so long as they meet either the 500 employees standard, or the standard for their respective industry, regardless of whether it’s an employee-based or revenue-based size standard. Note, however, that non-profit organizations must meet the employee-based standard and cannot look to revenue size standards.

Employees include all persons employed on a full-time, part-time, or other basis. Sole-proprietors, independent contractors, and certain self-employed individuals are also eligible recipients. Importantly, the CARES Act waives the “credit available elsewhere” test that SBA loans normally have, so eligible businesses are not required to seek credit elsewhere before applying. The CARES Act also eliminates the personal guaranty and collateral typically required to obtain an SBA loan.

Note, however, that some small businesses are ineligible even if they satisfy the foregoing criteria. Businesses are ineligible for a PPP loan if: (i) they engaged in any activity that is illegal under federal, state, or local law; (ii) they are a household employer (individuals who employ household employees such as nannies or housekeepers); (iii) an owner of 20% or more of the equity of the applicant is incarcerated, presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction, or has been convicted of a felony within the last five years; (iv) they are a business deemed ineligible by 13 CFR 120.110 (e.g., among others, financial businesses, passive businesses, insurance companies, government-owned entities); or (v) they were not in operation as of February 15, 2020.

Are there any change of ownership restrictions on PPP borrowers?

Yes.  The SBA published procedural guidance for lenders on what must occur when a PPP borrower wishes to sell its business or otherwise change ownership.  The guidance may be relevant to borrowers too because it sets forth what changes of ownership can occur without SBA approval.  In this context, a change of ownership means any of: (i) twenty percent (20%) of the stock or membership interests of a PPP borrower is sold or transferred, including to an affiliate or existing owner; (ii) fifty percent (50%) of the assets of a PPP borrower are sold or transferred; or (iii) a PPP borrower merges with another entity.  If a borrower is contemplating any of the foregoing, then they must notify their PPP lender before the transaction closes (and provide the lender with their proposed agreements).

Note that there are no change of ownership restrictions if either (i) the PPP loan has been repaid in full, or (ii) the loan forgiveness process has been completed and the SBA has remitted funds to the lender in full satisfaction of the PPP loan.

However, if the PPP loan has not been repaid or forgiven, then some restrictions on changes of ownership may apply.  Most importantly from a borrower’s perspective, no SBA approval is required if the change of ownership is a sale of stock or membership interests of fifty percent (50%) or less of the total stock or membership interests of the borrower, or the borrower submits all of its loan forgiveness application documentation and establishes an escrow account with the lender to pay any amounts not forgiven.  Similarly, a borrower may sell fifty percent (50%) or more of its assets without SBA approval if the borrower completes its forgiveness application and establishes an escrow account in the amount of the outstanding balance of the loan.  Under both of the prior circumstances, the escrow funds would pay down any remaining balance after the forgiveness process is completed.  For any changes of ownership that do not fall into the foregoing categories, prior SBA approval may be required.  Borrowers should consult with their attorneys and their lenders to make sure they are complying with all applicable restrictions.

How much can eligible businesses borrow?

For First Draw PPP loans, eligible recipients can receive loans for up to the lesser of (i) 2.5x their average monthly payroll costs over the prior twelve (12) months (or the aggregate 2019 or 2020 payroll), excluding any wages to an employee in excess of $100,000 per year, plus any amounts outstanding under an Economic Injury Disaster Loan, or (ii) $10 million.

How does an applicant calculate the amount they can borrow?

Per the SBA’s Interim Final Rule, you can calculate the maximum amount you can borrow by using the following guide:

1. Total payroll costs from the last twelve months for employees who live in the United States.
2. Subtract any salary or wages paid to an employee in excess of an annual salary of $100,000. For example, if an employee makes $130,000 a year in salary (excluding non-cash benefits), then for these purposes, only include $100,000 for that employee.
3. Calculate average monthly payroll costs by dividing the amount from Step 2 above by 12.
4. Take that number and multiply it by 2.5.
5. Finally, add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).

For example:

1. Assume total payroll costs from the last twelve (12) months of $1,200,000 (including $100,000 of non-cash benefits like vacation, health care, and retirement benefits).
2. If four (4) employees make $150,000, then we subtract the amount above $100,000 for each of them ($1,200,000 - $200,000 = $1,000,000) (Recall that only an employee’s salary and wages are relevant to the $100,000 cut off; non-cash benefits can exceed $100,000 when combined with salary less than $100,000.)
3. Divide $1,000,000 by 12 = $83,333.33
4. Multiply $83,333.33 by 2.5 = $208,333.33

Add in the amount of an outstanding EIDL (but not any emergency advance), if any, and that is the total amount of money you could borrow under the PPP.

Under what circumstances can a borrower reapply for a PPP loan or request a loan increase?

At the outset, if a borrower is interested in reapplying for a PPP loan or in requesting a loan increase, the SBA cannot have already remitted a forgiveness payment to the lender for that borrower’s loan.  If that has happened, the borrower may still be eligible for a Second Draw PPP loan, but not for any increase in the initial loan or re-disbursement of returned proceeds.

If a borrower either returned or repaid their original PPP loan, and the lender reported to the SBA that the borrower fully repaid or canceled the loan prior to December 27, 2020, then the borrower may apply for a new first draw PPP loan. 

For borrowers that repaid or returned part of their PPP loan, they may be eligible to request a loan increase equal to the difference between the amount retained by the borrower and the amount that had been previously approved.  If the lender reported the partial repayment to the SBA prior to December 27, 2020, then the lender may disburse the balance of the funds to the borrower.  The SBA offers the following example: A borrower received a $100,000 PPP loan, spent $75,000 of that during the Covered Period, and then returned the other $25,000 because the borrower could not use the money before the end of the Covered Period.  In that case, provided that the lender reported before December 27, 2020 that the borrower repaid the $25,000 and provided that the SBA has not sent a forgiveness payment to the lender, the lender can re-disburse the $25,000 to the borrower.

Finally, if a borrower did not accept the full amount of their approved PPP loan prior to December 27, 2020, then the borrower may request a loan increase up to the originally approved amount.

Note that these increases can only be requested by the lender of record (so if a borrower originally dealt with one bank, but that bank sold their loan to another bank, the bank that currently owns the loan would be the bank of record).

If a partnership received a PPP loan that did not include any compensation for its partners, can the loan amount be increased to include partner compensation?

Yes, if a partnership received a PPP loan that only included amounts necessary for payroll costs of the partnership’s employees and other eligible operating expenses, but did not include any amount for partner compensation, the lender may electronically submit a request to increase the PPP loan amount to include an appropriate amount of partner compensation.  Recall that partnerships, and not individual partners, are eligible for PPP loans.

If a seasonal employer received a PPP loan before December 27, 2020, can the loan amount be increased based on a revised calculation of the maximum loan amount?

Yes. If a seasonal employer received a PPP loan before December 27, 2020, and such employer would be eligible for a higher maximum loan amount under the Economic Aid Act, the lender may electronically submit a request to the SBA to increase the PPP loan amount.

What other PPP borrowers can reapply or request an increase in their PPP loan amount?

Borrowers that returned all of a PPP loan can reapply for a PPP loan in the amount they are eligible for.  In the case of borrowers that returned part of a PPP loan, they can reapply for the amount equal to the difference between what they kept and what they were previously approved for.  Similarly, if a borrower did not accept all of the funds they were approved for, then they may request an increase in the amount of the PPP loan up to the amount previously approved.  These requests must be submitted on or before March 31, 2021 and are subject to the availability of funds.

What counts as “payroll costs”?

“Payroll costs” are determined by the twelve (12) months prior to the application, and include the following items: (i) gross salary, wages, commissions, or similar compensation; (ii) payment of cash tips or equivalent, (iii) payment for vacation, parental, family, medical, or sick leave, (iv) allowance for dismissal or separation, (v) payment required for the provision of group health care benefits, including insurance premiums (group insurance benefits also include group life, disability, vision, and dental insurance), (vi) payment of any retirement benefit, and (vii) payment of State and local taxes assessed on the compensation of employees.    

Borrowers using the 24-week Covered Period can include up to $46,154 of cash compensation per employee (the equivalent of a $100,000 salary prorated over 24 weeks).  For borrowers electing to keep the 8-week Covered Period, they must maintain a $15,385 limit.  Note that very few borrowers will reach the $46,154 limit because the amount of loan proceeds from PPP loans has not changed and is still limited to 2.5 times average monthly payroll costs. Because of that, unless there is a reduction in FTEs, most borrowers will spend all of their loan proceeds before they reach $46,154 in cash compensation for any individual employee.

What contributions for retirement benefits will be considered payroll costs that are eligible for loan forgiveness?

Any retirement contributions and benefits paid or incurred by the borrower during the Covered Period are eligible as payroll costs but employee-paid contributions are not.  Note also that forgiveness is not provided for employer contributions for retirement benefits accelerated from periods outside the Covered Period.

What does “payroll costs” exclude?

“Payroll costs,” as defined in the CARES Act, specifically cannot include salary, wages, commission or similar compensation of an individual employee in excess of $100,000 annualized (but the first $100,000 of such employee’s salary would count as payroll costs). The $100,000 limitation applies only to salaries, i.e. an individual employee’s compensation for purposes of calculating payroll costs can exceed $100,000 when non-cash benefits are included, provided that no salary in excess of $100,000 is included in such calculation. Payroll costs also cannot include (i) compensation paid to employees whose principal place of residence is outside of the United States, (ii) federal employment taxes imposed or withheld during the applicable period, including the employer’s share of FICA and income taxes required to be withheld from employees, and (iii) qualified sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act. 

Does “payroll costs” include fringe union benefits?

Whether or not a business has to pay fringe benefits to its employees is determined by its Collective Bargaining Agreement and past practice. But it is unclear whether fringe benefits may be included in the calculation of payroll costs for purposes of determining the amount of a PPP loan or loan forgiveness. The guidance from the SBA specifically lists certain categories, i.e. (i) salary and wages, (ii) payments for vacation, parental, family, medical, or sick leave, (iii) allowance for separation or dismissal, (iv) payment for group health care coverage, including insurance premiums, and retirement, and (v) payment of state and local taxes assessed on compensation of employees. Other fringe benefits that may be included in a CBA are not included in that list.

So, even if your CBA requires that that fringe benefits be paid out to employees, it is possible that the SBA will interpret the statute as not permitting them to be included in payroll costs when determining whether a loan recipient is eligible for forgiveness.

A business’s obligation to pay fringes may be impacted by whether the business is paying the employee to work or simply paying the employee to take advantage of loan forgiveness.  In areas with a CBA requiring payment of fringes on “hours worked” rather than “hours paid,” hours paid by a business to an employee who is not rendering any service for the benefit of the business would be not be considered “hours worked” and would not require payment of fringes. 

When should payroll costs be paid and/or incurred in order for them to be eligible for forgiveness?

Payroll costs that are either paid or incurred during the Covered Period will be eligible for forgiveness.  The SBA has clarified that payroll costs are considered paid on the day that paychecks are distributed, or the day that an ACH credit transaction is initiated. 

The SBA has further clarified that any payroll costs incurred, but not paid, before the end of the Covered Period are still eligible for forgiveness if they are paid on or before the next regular payroll date.  Payroll costs are deemed “incurred” on the day that an employee’s pay is earned.  However, in the case of employees currently being paid but not performing work, the payroll costs are deemed incurred based on the schedule established by the borrower, e.g. on a day that the employee would normally have worked.

Is compensation paid to furloughed employees eligible for loan forgiveness?

Yes, so long as the compensation is paid to the furloughed employees during the Covered Period.

Are there any limits on the amount of loan forgiveness for compensation to owner-employees and self-employed individuals?

For borrowers using the 24-week Covered Period, owners can include the lesser of 2.5 months of their 2019 or 2020 compensation or $20,833.  For borrowers using the 8-week Covered Period, that amount is still capped at $15,385.  Note that the SBA considers this the total compensation that can be included for owners.  The instructions include notes to: (i) not add employer health insurance contributions made on behalf of a self-employed individual, general partners, or owner-employees of an S-corporation, because such payments are already included in their compensation; and (ii) not add employer retirement contributions made on behalf of self-employed individuals or general partners, because such payments are already included in their compensation.

How is owner compensation in a C-corporation treated?

In a C-corporation, an owner-employees are capped by their prorated 2019 or 2020 employee cash compensation.  Outside of cash compensation, the owner-employee of a C-corporation can also seek forgiveness for borrower-payments of state and local taxes assessed on their compensation, for borrower contributions to their employee health insurance, and for borrower contributions to their employee retirement plans capped by their prorated 2019 or 2020 employer retirement contribution.  Only the cash compensation is capped by the $20,833 figure.

How is owner compensation in an S-corporation treated?

In an S-corporation, owners that are also employees are eligible for loan forgiveness on their prorated 2019 or 2020 employee cash compensation.  Similar to C-corporations, borrowers can also seek forgiveness for borrower-payments of state and local taxes assessed on their compensation, and for borrower contributions to their employee retirement plans capped at the prorated 2019 or 2020 employer retirement contribution. However, employer contributions for health insurance are not eligible for additional forgiveness for S-corporation employees with at least a two percent (2%) ownership interest in the borrower, including employees who are family members of an individual with at least a two percent (2%) ownership interest.  Again similar to the C-corporation, only the cash compensation is limited by the $20,833 ceiling.

How is owner compensation for self-employed (Schedule C or F filers) treated?

Self-employed individuals (Schedule C or F filers) can apply for loan forgiveness for the prorated amount of their 2019 or 2020 net profit as reported on IRS Form 1040 Schedule C line 31.  If the borrower is a new business, then they must use the estimated 2020 Schedule C or F.  For these borrowers, separate payments for health insurance, retirement, and state and local taxes are not eligible for additional loan forgiveness.

How is owner compensation for general partners treated?

General partners may include in their compensation calculations their prorated 2019 or 2020 net earnings from self-employment that is subject to self-employment tax (see IRS Form 1065 Schedule K-1 box 14a, and reduced by box 12, section 179), multiplied by 0.9235.  For these borrowers, separate payments for health insurance, retirement, and state and local taxes are not eligible for additional loan forgiveness.  Note also that cash compensation to general partners is only eligible for loan forgiveness if the payments to partners were made during the Covered Period.

How is owner compensation in an LLC treated?

LLC owners must follow the instructions that apply to how their business was organized for tax filing purposes for the year used to determine their loan amount.

Are any individuals exempt from the owner-employee compensation rules when applying for loan forgiveness?

Yes.  The owner-employee compensation rules do not apply to individuals with a less than five percent (5%) stake in a c- or s-corporation borrower.

What is the Covered Period?

The Covered Period is the period (i) beginning on the date of the origination of a covered loan, and (ii) ending on a date selected by the eligible recipient of the covered loan that occurs between eight (8) weeks and twenty-four (24) weeks after the date of origination.

What can recipients spend loan proceeds on?

Loan recipients may spend loan proceeds on (i) payroll costs, (ii) costs associated with continuation of group healthcare benefits and insurance premiums, (iii) interest payments on mortgage debt incurred prior to February 15, 2020 (not including principal or prepayments), (iv) rent payments, (v) utility payments, and (vi) interest on any other debt obligations incurred prior to February 15, 2020. Generally, amounts not spent within the covered period following origination of the loan will convert into a term loan.

The Economic Aid Act added the following categories of eligible expenses:

Covered operations expenditures: includes the payment for any business software or cloud computing service that facilitates business operations product or service delivery the processing, payment, or tracking of payroll expenses human resources, sales and billing functions or accounting or tracking of supplies, inventory, records, and expenses.

Covered property damage costs: includes costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.

Covered supplier costs: includes expenditures made by an entity to a supplier of goods that (i) are essential to the operations of the entity at the time at which the expenditure is made, and (ii) are made pursuant to a contract, order, or purchase order that’s either in effect at any time before the Covered Period begins or, if it deals with perishable goods, is in effect before or at any time during the Covered Period.

Covered worker protection expenditures: includes operating or capital expenditures to facilitate adaptation of business activities of an entity to comply with any guidance or requirements established after March 1, 2020 by any of HHS, CDC, or OSHA, or any state/local equivalents.  These expenditures would include the purchase, maintenance, or renovation of drive through window facilities, air ventilation or filtration systems, physical barriers, expansion of combined business space, etc.

Note that borrowers are only eligible to receive forgiveness for the above new costs if the SBA had not yet remitted a forgiveness payment on the borrower’s loan to the borrower’s PPP lender as of December 27, 2020.

Note also that 60% of the loan proceeds must be spent on payroll costs. Recall also that the definition of “payroll costs” in the CARES Act does not include employee salaries above $100,000. 

When should non-payroll costs be paid and/or incurred to be eligible for loan forgiveness?

Non-payroll costs are eligible for loan forgiveness if they are paid during the Covered Period, or if they are incurred during the Covered Period and paid prior to the next regular billing date.  Note, however, that advance payments of mortgage interest are not eligible for loan forgiveness.

Are payments made on renewed leases or interest payments on refinanced mortgage loans eligible for loan forgiveness?

Yes, but only if the original lease or mortgage existed prior to February 15, 2020.

Can a borrower include amounts attributable to the business operation of a tenant or sub-tenant of the borrower in its non-payroll costs?

No.  If a borrower leases out a portion of its space that it either owns or leases, then the amounts of mortgage interest, rent, and utilities attributable to the tenant and/or sub-tenant cannot be included in the borrower’s non-payroll costs.  For example, if a borrower leases an office for $1,000 per month, and subleases part of the office to another business for $250 per month, then only $750 per month of the rent is eligible for forgiveness.  The SBA provides the following additional example: if a borrower has a mortgage on an office building it uses, and it leases part of the building to other businesses, then the portion of mortgage interest that is eligible for loan forgiveness is limited to the percent share of the fair market value of the space that is not leased out to other businesses.

Are rent payments to a related entity eligible for loan forgiveness?

Yes, but only if (i) the amount of loan forgiveness requested for rent payments is less than or equal to the amount of mortgage interest owed on the property during the Covered Period and attributable to the leased space, and (ii) the lease and mortgage were both in place prior to February 15, 2020.  Note that any common ownership means the parties are related for this purpose.  Borrowers will be required to submit relevant documentation to their lenders if this is the case. Note also that mortgage interest payments to a related party are not eligible for forgiveness.

Are expenses paid with PPP funds eligible for tax deductions?

Yes, the December 2020 Economic Aid Act incorporated a tax change that business trade groups had been calling for, i.e., it allowed expenses that are otherwise deductible and are paid with PPP proceeds to be deducted on a recipient’s taxes.  It broadly states that no deduction will be denied, no tax attribute shall be reduced, and no basis increase shall be denied, simply because an entity received forgiveness of a PPP loan. 

What is the Second Draw loan program?

Certain entities are eligible for a second PPP loan.  To be eligible, borrowers must (i) not employ more than 300 employees, (ii) have spent 100% of their first PPP loan prior to origination of the second, and (iii) demonstrate at least a 25% reduction in gross receipts in any quarter of 2020 compared to the same quarter in 2019 (alternatively, applicants can compare annual gross receipts of 2020 to 2019 if they were in business in 2019).

Are there any additional eligibility restrictions on receiving a second PPP loan besides the reduced revenue requirement?

Yes, entities that cannot receive a Second Draw PPP loan include: (i) entities that are normally ineligible for SBA 7(a) loans (excluding nonprofits and religious organizations, which have been exempted), (ii) any entity the primary business of which is lobbying activities, including entities organized for research or advocacy in public policy or political strategy, or think tanks, (iii) any business concern for which an entity created in or organized under laws of China or Hong Kong, or that has significant operations in China or Hong Kong, owns or holds, directly or indirectly, not less than twenty percent (20%) of the economic interest of the entity, (iv) any business concern that retains a resident of China as a member of the board of directors, and (v) entities required to register under FARA.

How much can eligible borrowers receive as part of the second round of PPP loans?

The maximum loan amount is the lesser of 2.5x monthly average payroll costs (for either calendar year 2019 or 2020 or the twelve (12) month period prior to origination) and $2 million. 

Are there any other changes from the first round of PPP loans?

Yes: (i) borrowers with more than one (1) physical location cannot employ more than 300 employees per location; (ii) the affiliation rules that applied to the first round of PPP loans have been waived for several categories of businesses, including any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a North American Industry Classification System code beginning with 72, and business concerns operating as a franchise; (iii) fees for borrowers and lenders have been waived; (iv) there is a simplified application process for borrowers seeking less than $150,000.

Are Second Draw PPP loans also eligible for forgiveness?

Yes—similarly to the first loans, recipients of a second PPP loan would be eligible for loan forgiveness in an amount equal to payroll costs, plus covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the Covered Period.  Despite the new cost categories, borrowers must still spend 60% of the proceeds on payroll costs.

What about borrowers that returned all or part of their first PPP loan?

The Economic Aid Act directs the SBA to issue guidance regarding how Borrowers that returned all or part of their first loans may be able to reapply for a second loan in the amount equal to the difference between the amount the borrower did not return and the maximum amount otherwise available to the borrower. 

Has the SBA issued any guidance for the new PPP loans and Second Draw PPP loans?

Yes, the SBA has issued a new interim final rule[1] regarding PPP loans as they were changed by the Economic Aid Act, as well as a separate new interim final rule for the Second Draw PPP loans.[2]

Are there specific forms for the second round of PPP loans?

Yes. The SBA has released a revised form for first time borrowers, which can be found here[3], and a form for use by borrowers seeking a Second Draw loan, which interested borrowers can find here.[4]  When submitting the Second Draw PPP application, borrowers will have to submit, unless it was provided during the application for the first PPP loan, Form 941 (or Form 1040 Schedule C for self-employed individuals) and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processing records, as well as other documentation as may be requested by the lender.

When must eligible borrowers have spent all of their PPP loan proceeds in order to receive a Second Draw PPP loan?

Borrowers must have used the full amount of their first PPP loan prior to the disbursement of the Second Draw loan.  However, borrowers can apply for the Second Draw PPP loan prior to having spent all of their first loan proceeds.

How and when do applicants for Second Draw PPP loans submit documentation showing the required decline in gross receipts?

A borrower must calculate this revenue reduction by comparing the borrower’s quarterly gross receipts for one quarter in 2020 with the borrower’s gross receipts for the corresponding quarter of 2019.  For loans with a principal amount of $150,000 or less, the applicant does not need to submit any documentation at the time of the application but will have to submit documentary proof of the decline when applying for loan forgiveness.  If applying for a Second Draw PPP loan in excess of $150,000, then the applicant will be required to submit the documentation at the time of application.  This documentation may include relevant tax forms, quarterly financial statements, or bank statements.  Note that some borrowers may be able to compare their annual 2020 receipts to their annual 2019 receipts if they were in business in 2019.

Are borrowers with unresolved issues regarding their first draw PPP loans eligible for Second Draw PPP loans?

An applicant for a Second Draw PPP loan whose file is under review by the SBA will not be able to receive a new Second Draw loan when their lender submits the Second Draw loan application to the SBA until the SBA resolves the outstanding issue.  The SBA has indicated that they will seek to resolve any such issues expeditiously.

For purposes of Second Draw PPP loans, what constitutes “gross receipts”?

Gross receipts for a for-profit business include all revenue in whatever form received or accrued (in accordance with the borrower’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. Generally, receipts are considered “total income” plus “cost of goods sold,” and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms. Gross receipts do not include the following: taxes collected for and remitted to a taxing authority if included in gross or total income (such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees), and/or proceeds from transactions between a concern and its domestic or foreign affiliates. All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer's request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts.  Any amounts received from a first draw PPP loan would not be included in gross receipts.  Note that this definition of gross receipts is different for a non-profit, and would conform to Section 6033 of the Internal Revenue Code.

How are gross receipts for affiliates calculated?

Gross receipts for affiliates are calculated as follows: (i) gross receipts of a borrower with affiliates is calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate; (ii) in the case of an acquisition or merger during 2020, gross receipts includes the receipts of the acquired or acquiring concern (this applies for the whole reference period, not just after the acquisition or merger), however, if a concern acquired a segregable division of another business concern during 2020, gross receipts do not include the receipts of the acquired division prior to the acquisition; and (iii) the gross receipts of a former affiliate are not included. This exclusion of gross receipts of such former affiliate applies during the entire reference period, rather than only for the period after which affiliation ceased. However, if a borrower sold a segregable division during 2020, the gross receipts will continue to include the receipts of the division that was sold.

Are there additional certifications necessary for the Second Draw PPP loans?

Yes.  In addition to the general certifications borrowers had to make for the first draw loans, any applicant for a Second Draw loan will also have to certify that (i) they have realized a reduction in gross receipts in excess of 25% relative to the relevant comparison period, (ii) that the applicant has spent, or will spend, all of its first draw loan proceeds prior to disbursement of the Second Draw loan, and (iii) that the applicant does not fall into one of the various ineligible categories.

Is there any information available regarding calculations for Second Draw loans?

Yes, the SBA released more information about the calculation of Second Draw loan amounts and gross receipts reductions on January 19, 2021.[5]  The guidance covers a range of situations, including what documentation is required to show the gross receipts reduction, how self-employed PPP borrowers should calculate their loan amounts, and which instructions an LLC should follow.

Can a Second Draw applicant document its reduction in gross receipts with income tax returns if it files taxes on the basis of a fiscal year that differs from the calendar year?

Entities that use a fiscal year to file taxes may document a reduction in gross receipts with income tax returns only if their fiscal year contains all of the second, third, and fourth quarters of the calendar year (i.e., have a fiscal year start date of February 1, March 1, or April 1). 

How do partnerships apply for the Second Draw PPP loan?

Partnerships should apply as partnerships (individual partners cannot apply for separate PPP loans).  Payroll costs would include partner compensation (but not contributions for partner health insurance or retirement plans), employee wages, and employer contributions to employee group insurance and retirement plans (all subject to the same annual $100,000 cash compensation limit as before), and employer state and local taxes assessed on employee compensation.  Partnerships will have to submit their 2019 Form 1065 (including K-1s) to document the foregoing amounts.

Is the process the same for s- and c-corporations?

Generally, yes. Payroll costs will still include employee wages (subject to the annual $100,000 limit), employer group insurance contributions, employer retirement contributions, and employer state and local taxes assessed on employee compensation.  Note that, as before, owners of an s-corporation cannot include contributions to their own group insurance.

How are LLCs treated for the Second Draw loans?

LLC owners should follow the instructions that apply to their tax filing status during the reference period used to calculate payroll costs (either 2019 or 2020).

If a borrower that was eligible for a First Draw PPP Loan files for bankruptcy protection after disbursement of the First Draw PPP Loan, is that borrower eligible to apply for a Second Draw PPP Loan?

No—each applicant for a Second Draw PPP Loan must certify on the Second Draw application form that the applicant and any owner of 20% or more of the applicant is not presently involved in a bankruptcy proceeding.  As a result, any borrower that received a First Draw PPP Loan and files for bankruptcy protection after disbursement of the First Draw PPP Loan cannot be eligible to apply for a Second Draw PPP Loan.  Note that “presently involved in any bankruptcy” means any bankruptcy proceeding that is ongoing until the Bankruptcy Court has entered a discharge, an order confirming the plan in the case, or an order dismissing the case, as applicable.  The order must be entered prior to the date of the application (when the certification would be made).

If a borrower received partial forgiveness of its First Draw PPP Loan, does this make the borrower ineligible for a Second Draw PPP Loan?

A borrower that received partial forgiveness of its First Draw loan can still be eligible for a Second Draw PPP loan if the borrower used the full amount of the First Draw loan only for eligible expenses.

Do recipients need to start paying back the loans right away?

No. The program allows for deferral of all payments until the amount of loan forgiveness is determined and remitted to the lender.  however, that if a borrower does not apply for loan forgiveness before ten (10) months after the end of their Covered Period, then they will be required to begin principal and interest payments, i.e. borrowers cannot indefinitely delay the end of the deferral period by not applying for loan forgiveness.

If any amount of the loan is not forgiven, what are the loan terms?

If any amount of the loan is not forgiven, lenders may charge a maximum of one percent (1%), and the loan matures two (2) years (for loans issued prior to June 5, 2020) or five (5) years (for loans issued after June 5, 2020).

How can PPP loans be disbursed?

The Rule clarifies that PPP recipients must take their loans as a one-time lump sum payment within ten (10) calendar days of the loan being approved.

Are PPP loans eligible for forgiveness?

Yes. Recipients of Paycheck Protection Program loans may apply to have their loans forgiven. While there may be other things a loan recipient is permitted to spend loan proceeds on, the statute and regulations only list certain things as being eligible for loan forgiveness. Recipients are eligible for forgiveness in the amount equal to what the recipient spends on (i) payroll costs, (ii) mortgage interest, (iii) rent, (iv) utilities (all of which must have been incurred or begun service prior to February 15, 2020), (v) covered operations expenditures, (vi) covered property damage costs, (vii) covered supplier costs, and/or (viii) covered worker protection expenditures in the eight (8) – twenty-four (24) week period after origination of the loan. Only 40% of the amount spent over the eight (8) week period can have been for non-payroll costs.

After the eight (8) – twenty-four (24) week period, borrowers will be able to apply to their lenders for forgiveness. Lenders will have sixty (60) days in which to make a determination.

For example, if a PPP loan originates on April 20, 2020, then the eight (8) week period will run from April 20, 2020 until June 15, 2020. Let’s assume the borrower received $100,000. During that eight (8) weeks, if the borrower spends $80,000 on payroll costs, $10,000 on rent or mortgage interest, and $10,000 on utilities, then 100% of the loan is eligible for forgiveness because the borrower (i) only spend the funds on approved costs eligible for forgiveness, (ii) spent 60% or more of the funds on payroll costs, and (iii) spent 100% of the funds within the eight (8) week period (but note that the borrower could select any date between eight (8) and twenty-four (24) weeks.

Is the amount of the loan that is forgiven reduced by any factors?

Yes. There are two factors that can reduce the portion of the loan that is forgiven: (i) reduction of employees, and (ii) reduction in salaries.

How is the loan forgiveness reduced if a recipient has laid off employees?

The amount of the loan that is forgiven is reduced by multiplying (i) the average number of full-time equivalent employees by (ii) the quotient obtained by dividing the average number of full-time equivalent employees per month during the Covered Period by either, at the election of the borrower, (a) the average number of full-time equivalent employees per month employed during February 15, 2019 through June 30, 2019 or (b) the average number of full-time equivalent employees per month during January 1, 2020 through February 29, 2020.  If the average number of FTEs during the Covered Period is less than during the reference period, the total loan forgiveness will be proportionately reduced.  Recipients will be required to submit documentation when applying for loan forgiveness to demonstrate the amount of loan forgiveness for which they are eligible, e.g. payroll tax filings reported to the IRS, state income, payroll, and unemployment insurance filings, canceled checks for mortgage interest payments, etc.

For example, let’s assume the following:

• A loan recipient called ABC, LLC received a loan for $100,000 and spent 100% of it on approved, forgivable costs.
• During the eight (8) weeks following origination, ABC has an average of ten (10) full-time equivalent employees per month.
• During January 1, 2020 through February 29, 2020, ABC had an average of twelve (12) full-time equivalent employees per month.
• Using the formula above, ABC divides 10 by 12 = .83 and multiplies that number by the amount spent on forgivable costs ($100,000) = $83,000.

So in that example, ABC would be eligible for forgiveness of $83,000 of the loan.

Will a borrower’s PPP loan forgiveness amount be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

No, not if the borrower can show a good faith effort to rehire and replace the employee.

How do borrowers need to make and document good faith offers to rehire laid off employees?

As previously noted, borrowers are not penalized for the reduction in FTEs if they make good faith offers to rehire employees and are rejected. In these circumstances, the following conditions must be satisfied: (i) make a good faith, written offer to rehire the laid off employee (or restore the employee’s reduced hours) during the Covered Period or Alternative Payroll Covered Period; (ii) the offer must be for the same pay and hours as the last pay period prior to the termination or reduction in hours; (iii) the employee rejects the offer; (iv) the borrower maintains records documenting the offer and its rejection; (v) the borrower must also inform the applicable state unemployment insurance office of the offer and rejection within thirty (30) days of the rejection. 

How is the loan forgiveness reduced if a recipient has reduced salaries?

The portion of the loan that is forgiven is also reduced by the amount of any reduction in total salary or wages of any employee in excess of 25% of the total salary or wage of such employee (excluding employee salaries in excess of $100,000 annually). As noted above, recipients will be required to submit documentation when applying for loan forgiveness to demonstrate the amount of loan forgiveness for which they are eligible, e.g. payroll tax filings reported to the IRS, state income, payroll, and unemployment insurance filings, canceled checks for mortgage interest payments, etc.

For example, if ABC, LLC had two (2) employees making $100,000 annually, and reduced their salaries to $50,000 annually, then the amount of forgiveness that ABC could receive would be reduced by $50,000 (the first 25% reduction was allowable, so only the combined reductions from $75,000 to $50,000 are penalized).

How does the loan forgiveness process work?

Borrowers must complete the Loan Forgiveness Application and then submit it to their lender, and their lender will then have sixty (60) days from receipt of the completed application to submit a decision to the SBA.  The lender is responsible for notifying the borrower of the approved forgiveness amount.

Note that the SBA may conduct its own review, in its discretion, of the Loan Forgiveness Application for any PPP loan, including with regard to borrower eligibility, the loan amounts and use of the proceeds, and whether the loan is eligible for forgiveness.  If the SBA has concerns regarding a borrower’s eligibility, they will require the lender to seek additional information from the borrower.  If the SBA requests additional information, borrowers are obligated to respond, but will continue to provide documents and information through their lender.

In the event that the SBA determines that a borrower is ineligible for a PPP loan or for loan forgiveness, borrowers may appeal that decision.  The SBA and Treasury Department have indicated that they will issue additional guidance regarding that process.

Does the loan forgiveness application explain how to calculate how much of a PPP loan is eligible to be forgiven?

Yes, there is a line by line explanation of the amounts to enter in order to calculate the amount of the loan that is eligible for forgiveness.

Does the loan forgiveness application require any new certifications?

Yes, when submitting the application, borrowers will have to certify to several things, including but not limited to: (i) that the amount requested for forgiveness was spent on costs eligible for forgiveness; (ii) that the borrower has accurately verified those costs; (iii) that the information in the application is true and correct, and that the borrower understands the consequences for making false statements when seeking loan forgiveness; and (iv) that the tax documents submitted to the lender when applying for loan forgiveness are consistent with those that the borrower has submitted or will submit to the IRS and/or the applicable state tax agency.  Borrowers who are owner-employees or self-employed will also have to certify that the amount included for compensation to owner-employees or self-employed individuals does not the permitted amount.

Does the loan forgiveness application explain how to calculate FTEs?

Yes, for each employee, borrowers should: (i) enter the average number of hours paid per week; (ii) divide by 40; and (iii) round the total to the nearest tenth. The maximum for each employee is capped at 1.0.  Borrowers may also choose to use a simplified method and use a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours.

Does the loan forgiveness application clarify how the forgiveness reduction works if there are salary/wage reductions?

Yes, the actual amount of loan forgiveness the Borrower will receive will be reduced by the total dollar amount of the salary or wage reductions that are in excess of 25 percent of base salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period.  Borrowers have to complete the application worksheet to determine what level of reduction they will receive.

What if I do not spend all of the PPP loan proceeds during the Covered Period?

If a borrower spends less than 60% percent of the PPP loan proceeds on payroll costs during the Covered Period, the borrower will still be eligible for partial loan forgiveness, provided that at least 60% of the amount forgiven was used for payroll costs.  the 60% threshold for payroll costs should be understood as a proportional limit for non-payroll costs, i.e. that the amount of loan forgiveness a borrower receives must include not more than 40% of non-payroll costs (rather than spending less than 60% on payroll costs being an absolute bar to forgiveness). 

To use the example in the question, if a borrower receives a $100,000 PPP loan, and spends $54,000 on payroll costs (i.e., 54% of loan proceeds) and $46,000 on non-payroll costs, then they have obviously spent less than the 60% threshold on payroll costs.  This is not a bar to loan forgiveness, but results in a proportional reduction in the forgiveness amount.  Because the borrower spent less than 60% of the loan proceeds on payroll costs, the borrower can only receive loan forgiveness of $90,000 (because $54,000 is 60% of $90,000, and the loan forgiveness amount must be comprised of at least 60% payroll costs).

Which borrowers are eligible to use the “EZ” Loan Forgiveness Application Form?

The SBA is now allowing some businesses to use a simplified loan forgiveness application, called Form 3508EZ.  Borrowers can use this form if they satisfy one of the following three conditions:

1. The Borrower is a self-employed individual, independent contractor, or sole proprietor that did not have any employees when it applied for the PPP loan, and did not include any employee salaries in the loan application; or
2. The Borrower did not reduce salaries or wages of any employee by more than 25% during the Covered Period, and did not reduce the number of employees or average paid hours of employees during the Covered Period (excluding reductions that arose from an inability to rehire employees or similarly qualified workers); or
3. The Borrower did not reduce salaries or wages of any employee by more than 25% during the Covered Period, and the borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements and/or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

Is there any benefit to using the EZ Form?

Yes, the EZ Form makes the application easier to complete.  Because the borrower is certifying that they fall into one of the three (3) categories outlined above, the EZ Form does not require calculations or adjustments for reductions in FTEs or salaries.

What is the deadline for submitting a loan forgiveness application? 

Borrowers may submit a loan forgiveness application for their PPP loan at any time prior to their loan maturing.  The maturity date is different for each individual loan, but may be between two (2) and five (5) years after the loan originated.  Note, however, that the deferral period for PPP loan payments is ten (10) months from the end of the Covered Period.  Therefore, borrowers would have to begin making loan payments on their PPP loan if they have not submitted their loan forgiveness application by then.  It would be preferable for most borrowers to submit their loan forgiveness applications prior to the end of the deferral period.

Is there a simplified forgiveness form for borrowers that received a PPP loan of less than $150,000?

Yes. As called for in the Economic Aid Act, the SBA has released Form 3508S[1], which is a one-page forgiveness application along with a few pages of instructions.  Essentially, the borrower needs to supply basic information about its loan, including the disbursement date, loan amount, Covered Period, and the amount of forgiveness being sought.  Forgiveness applicants are not required to submit any supporting documentation but must keep their records in case of a later audit and must certify as to the information provided when submitting the form.

Are there also new forms for loans of more than $150,000?

Yes, the SBA has also released revised Form 3508[2] and revised Form 3508EZ.[3]  Note that, as before, these forms do require borrowers to submit their payroll and nonpayroll documentation with their forgiveness applications. 

Has the SBA provided any more information regarding forgiveness of Second Draw loans?

Yes, a new interim final rule on loan forgiveness was released.  The rule largely serves to consolidate all of the existing loan forgiveness rules and to implement the changes made by the Economic Aid Act that have already been noted above (e.g., new categories of approved costs). 

Any borrower applying for loan forgiveness for a Second Draw PPP loan of more than $150,000 must submit the application for its first draw PPP loan prior to or simultaneously with the forgiveness application for the Second Draw PPP loan, even if the forgiveness amount will be zero.

Are forgiven loans considered taxable income?

Not by the IRS. Loan amounts forgiven under this program will not be considered taxable income by the federal government. Individual states may treat them differently.

If a borrower that was eligible for a First Draw PPP Loan files for bankruptcy protection after disbursement of the First Draw PPP Loan, is that borrower eligible for loan forgiveness of its First Draw PPP Loan?

Yes, a borrower may still be eligible for loan forgiveness even if it has filed for bankruptcy protection, provided it meets all of the requirements for loan forgiveness, including but not limited to, using loan proceeds only for eligible expenses and at least 60% of the loan proceeds being used for eligible payroll costs.

What if a recipient has already laid off employees or reduced salaries? Are those recipients still eligible for loan forgiveness?

Yes. The amount of loan forgiveness is determined without regard to a reduction in the number of full-time equivalent employees of a recipient or to the reduction of one or more employees’ total salary and wages that occurred between February 15, 2020 and April 26, 2020, if the recipient eliminates the reduction in full-time equivalent employees and/or eliminates the reduction in total salary not later than December 31, 2020 (or, for a PPP loan made on or after December 27, 2020, not later than the last day of the loan’s covered period). 

For example, if ABC, LLC laid off three (3) of its twenty (20) employees between February 15, 2020 and April 26, 2020, the law provides that the amount of loan forgiveness will be determined without regard to that reduction, so long as ABC “eliminates the reduction” in full-time equivalent employees before December 31, 2020. Likewise, if ABC had reduced two (2) employees’ salaries from $100,000 to $50,000, but then eliminated such reductions prior to December 31, 2020, then the amount of loan forgiveness ABC was eligible for would be determined without regard to that salary decrease.

Are there any exceptions for reductions in FTEs that do not count against the loan forgiveness amount?

Loan forgiveness will be calculated without regard to any proportional reduction in FTEs attributable to instances in which the borrower can document, in good faith, (i) an inability to rehire employees that were employees on February 15, 2020, and (ii) an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020 (or, for a PPP loan made on or after December 27, 2020, not later than the last day of the loan’s covered period), or (iii) that the borrower is unable to return to the same level of business activity as the business was operated at as of February 15, 2020 due to compliance with sanitation or social distancing guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration from March 1, 2020 to the end of the national emergency.

In what instances does the loan forgiveness reduction safe harbor apply to reductions in FTEs?

The application reiterates that borrowers are exempt from the FTE reduction penalty if they satisfy both of the following conditions: (i) the borrower reduced its FTE levels in the period beginning February 15, 2020 and ending April 26, 2020; and (ii) the borrower then restored its FTE levels by not later than December 31, 2020 (or, for a PPP loan made on or after December 27, 2020, not later than the last day of the loan’s covered period). to its FTE levels in the borrower’s pay period that included February 15, 2020.

If a borrower has reduced the hours of some of its employees, is its loan forgiveness amount reduced by both the reduction in FTEs and the reduction in wages resulting from the reduction in hours?

No, the SBA has clarified that borrowers will not be doubly penalized: the salary/wage reduction in loan forgiveness only applies to the portion of the decline in salary/wages that is not attributable to a reduction in FTEs (i.e. if an hourly employee receives less wages because his/her hours were cut from 40 to 20, but his/her rate of pay was the same, then the borrower is only penalized for the reduction in FTEs from 1.0 to 0.5, and not for the reduction in wages received as a result of the reduction in hours (since the hourly rate of pay was the same)).

Is the SBA going to audit loan recipients?

A new FAQ issued by the Treasury Department poses the question of whether “businesses owned by large companies with adequate sources of liquidity to support the business’ ongoing operations qualify for a PPP loan?” In response to this, the Treasury Department reiterates that borrowers must be able to certify that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” That’s the same language from the Act, and the same certification borrowers have already made when applying for their loans.

The response goes on say that borrowers must take into account their current business activity and their ability to access other sources of liquidity “sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” The response makes specific reference to public companies “with substantial market value and access to capital markets” and states that such companies are unlikely to qualify.  

The answer to whether a specific borrower is able to make the above certification in good faith depends entirely on that borrower’s circumstances.

The auditing example given by the Treasury Department references publicly traded companies. Is this something I need to consider if my company is privately held?

Yes. Subsequent guidance issued in the Treasury’s ongoing FAQs indicates that private companies must look to the same requirements issued by Treasury for publicly traded companies.

What if my business received a PPP loan, but did not experience the anticipated loss in revenue?

Per the SBA, the relevant standard is a determination that the certification of the borrower was “made in good faith at the time of the loan application, even if subsequent developments resulted in the loan no longer being necessary.”  Not experiencing the anticipated revenue declines is not necessarily evidence of bad faith.  The SBA has made this explicit, indicating through guidance relevant to the loan necessity questionnaires that not experiencing an expected loss in revenue is not conclusive proof of an improperly received loan. 

Is there any additional information on how the SBA will review the certifications made by loan applicants?

Yes, the guidance states that borrowers that, combined with their affiliates, received less than $2 million, will be deemed to have made the certification in good faith.  That means that any recipient, when considered in combination with their affiliates, that did not receive more than a $2 million PPP loan is automatically deemed to have acted in good faith when submitting the application.  This is consistent with Treasury’s prior guidance that their review would focus on PPP loan recipients of more than $2 million.

Treasury also clarified that borrowers that received more than $2 million may still have made the certification in good faith depending on their individual circumstances. However, if the SBA determines in the course of its review that a borrower lacked an adequate basis to make the certification regarding the necessity of the loan request, then the SBA will seek repayment of the loan and will notify the borrower’s lender that the borrower is not eligible for loan forgiveness.

Importantly, the guidance also states that if the improper loan is paid back after the borrower receives notice from the SBA, then the SBA will not pursue additional administrative enforcement or referrals to other agencies.

Note also that, per subsequent guidance from the SBA, the relevant standard is a determination that the certification of the borrower was “made in good faith at the time of the loan application, even if subsequent developments resulted in the loan no longer being necessary.”  Not experiencing the anticipated revenue declines is not necessarily evidence of bad faith.

How long must borrowers retain their loan records?

Borrowers must maintain all records relating to their PPP loans, including the loan forgiveness application, related worksheets, and documentation for six (6) years after the date the loan is forgiven or repaid in full.  Borrowers must provide such copies to the SBA and/or its Office of the Inspector General upon request.

What are the loan necessity questionnaires?

The SBA has released two questionnaires for borrowers (one for for-profit borrowers and one for non-profit borrowers) that received PPP loans of $2 million or more (including affiliates’ loan amounts).  The SBA has said that receipt by a borrower of one of these loan forgiveness questionnaires does not mean that the SBA is challenging the borrower’s certification, but rather seeking additional information while reviewing those certifications.  Recall that borrowers were required—when applying for their PPP loan—to certify in good faith that the current “economic uncertainty makes this loan request necessary to support the ongoing operations” of the borrower.

The good news for borrowers is that the SBA’s guidance allows for the possibility that the borrower expected to need the loan funds even if that expectation ultimately did not come to fruition. Per the SBA, the assessment must yield a determination that the certification of the borrower was “made in good faith at the time of the loan application, even if subsequent developments resulted in the loan no longer being necessary.”

The SBA also indicates that it will use a “multi-factor analysis” to determine whether the borrower’s certification was made in good faith, but unfortunately does not delve into detail regarding what specific factors will be included.  However, Borrowers can glean some information regarding the areas of interest from the forms themselves, and the SBA has stated that it “may take into account the borrower’s circumstances and actions both before and after the borrower’s certification”.

What effect, if any, does qualified sick and family leave under the Families First Coronavirus Response Act have on Paycheck Protection Program loans?

Qualified sick and family leave wages for which a tax credit is allowed under the Families First Coronavirus Response Act cannot be counted as payroll costs for determining loan amounts under a Paycheck Protection Program loan.

What changes to the deferral of payroll taxes does the PPP Flexibility Act make?

Section 2302 of the CARES Act, which allows for the delay of payment of certain payroll taxes, originally included a prohibition against companies delaying their payroll taxes if they received loan forgiveness for a PPP loan.  That prohibition was deleted, and loan forgiveness through the PPP is no longer a factor in whether that borrower can also delay payment of their payroll taxes pursuant to the CARES Act.

Can a borrower receive both a PPP loan and a Shuttered Venue Operator Grant?

Only in certain circumstances.  Businesses that receive a first or second draw PPP loan after December 27, 2020 may also receive a grant under the Shuttered Venue Operator Grant program, but must subtract the proceeds from the PPP loans from the amount of the grant (unless the PPP loan(s) were received prior to December 27, 2020.

If a borrower received both an EIDL emergency advance and a PPP loan, does the EIDL grant affect the borrower’s PPP loan forgiveness?

No, borrowers are not required to deduct the amount of their EIDL grant from their PPP loan forgiveness amount. 

Is an employer that receives a First Draw PPP Loan or Second Draw PPP Loan also eligible for the Employee Retention Credit?

Yes, an employer that received a First Draw PPP Loan or Second Draw PPP Loan may now claim the Employee Retention Credit if the employer is otherwise an eligible employer that otherwise satisfies the requirements for the credit. Note, however, that any payroll costs that are qualified wages for the Employee Retention Credit are not eligible for loan forgiveness if the employer elects to claim the credit for those amounts.