On April 2, 2020, the U.S. Small Business Administration (SBA) issued an interim final rule, providing additional guidance on the Paycheck Protection Program (PPP). Click here to read the full text of the Interim Final Rule. Here are some of the highlights of new and/or clarified information from the previous guidance issued by Treasury and SBA and the text of the CARES Act:


  • Only U.S. employees of a business are counted in the 500 employee count
  • Independent contractors are not included in the employee count

Affiliation Rules

  • SBA indicated it intends to “promptly” provide additional guidance on the applicability of the affiliation rules in determining eligibility for a PPP loan

Payroll Costs

  • Amounts paid by a business concern to an independent contractor are not included in “payroll costs”
  • “Payroll costs” do not include federal employment taxes imposed or withheld between February 15, 2020, and June 30, 2020, including employee’s and employer’s share of FICA or income taxes required to be held from employees

Loan Amount

  • Outstanding amounts of an Economic Injury Disaster Loan made between January 1, 2020, and April 3, 2020, less the amount of any “advance” (i.e., the $10,000 grant businesses may have received) under an EIDL COVID-19 loan are refinanced in the PPP loan, with the total cap still being $10 million

Loan Terms

  • Interest Rate on the PPP loans was increased from 0.50 percent to 1.00 percent
  • Loan term will only be two years even though the CARES Act indicated it could be up to 10 years

Loan Forgiveness

  • Forgiveness for non-payroll costs will be capped at 25 percent of the PPP loan proceeds
  • Proceeds of a $10,000 EIDL grant received by a borrower will be deducted from the amount of loan forgiveness
  • Additional guidance on loan forgiveness will be provided

Lender Guidelines

  • Lenders will need to collect “know your customer” information from new customers only and are permitted to rely on existing documentation for current customers unless the institution’s risk-based approach to BSA compliance requires

We encourage you to contact your existing lender now to alert them you are interested in applying for a PPP loan.

For a list of the 100 most active SBA 7(a) lenders, please click here.

New lenders can apply to the SBA for approval to make PPP loans by submitting their applications to [email protected].

To read the latest text of the specific information from Treasury and SBA for Borrowers, click here. To read the latest text of the specific information released by Treasury and SBA for Lenders, click here. Click here for the link to the form of application released by the SBA.

To read the full text of the CARES Act, please click here. To read our earlier client alerts on the PPP, please click here and here.