Paycheck Protection Program Questions and Answers

When the Paycheck Protection Program launched Friday, April 3, there were still many questions on how to determine the loan amount, especially surrounding the payroll calculations. As of Tuesday, April 7, more guidance came out from the U.S. Department of Treasury.

5 Points to Know When Calculating for the Paycheck Protection Program

Here are some clarifying points to be aware of when calculating your Paycheck Protection Program loan potential:

  1. You can either use the trailing 12 months or calendar year 2019 to calculate (see question 1 below for more information)
  2. Do not deduct federal payroll taxes from gross wages for the calculation
  3. Do not add employer federal payroll taxes to the calculation
  4. Limit salaries and wages to $100,000; then add benefits, retirement, and state and local employer payroll taxes (see question 2 below)
  5. Independent contractors are not to be included in the calculation (independent contractors can apply for their own PPP loan if applicable)

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Common Questions with the Paycheck Protection Program

Here are some common questions and answers with the Paycheck Protection Program.
1. Question: What 12-month window of time do companies need to use for the maximum loan amount?

Answer: The application requests 2019 payroll. However, some companies may have done more hiring in the past 12 months. It has been confirmed that companies can use either the trailing 12 months or calendar year 2019 to calculate average monthly payroll. The employee totals should take into account the same average numbers of employees over the same time period as above. If your company has not been in business for 12 months, you can average the number of employees for each of the pay periods that were operational.

2. Question: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all eligible employee benefits as described in the CARES Act?

Answer: No. The exclusion of compensation in excess of $100,000 applies only to cash compensation, not to allowable benefits like employer contributions to retirement plans and healthcare benefits.

3. Question: Will the lender need to replicate the borrower’s payroll calculations?

Answer: No. Accurate calculations are the responsibility of the borrower. Lenders will review and in some cases, require more information or make inquiries as applicable. Lenders are using their own application processes. If you have already completed an application, but need to change information based on updated guidance, please contact your lender.

You can view the updated application and other information on the Paycheck Protection Program by visiting the U.S. Department of Treasury website at

If you have any questions about the CARES Act, please contact your DHJJ CPA or fill out the form below.

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