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The Payroll Protection Package [The PPP]

Updated: Apr 11, 2020

We have new information overnight, some clarifications, and still several unknowns. I will pass on here what we currently know: Again, budgeting and financial planning is the first key; that you can continue or forecast a current or future, but definitely continuing, profitable business. So, if you are closed under the isolation order, you have to ask yourself if it makes sense to re-hire employees under the Payroll Protection Plan, if you incur other additional costs? Is it valuable or helpful to force your employees off unemployment benefits? And the obvious unknown, can you be open at any time during the 8 week period so that you get maximum benefit from the PPP? Or is there another way to benefit from working remotely during isolation and paying employees with this “free” money? For essential businesses that are operating, and for those businesses that can work remotely, this PPP is probably a no-brainer that it will benefit you, but you should still examine that against the financial piece of your business re-build plan.

What is included the base payroll cost for calculation the loan amount?

  • Gross wages (box 1 of W2) including vacation, sick etc. (probably the 2019 amount) limited to $100,000 per employee.

  • Health benefit costs

  • Employer retirement plan costs

  • Employee voluntary retirement contributions that reduce Box 1 wages

  • State payroll tax costs

  • (latest guidance says outside contractors NOT included) (seasonal businesses use a different time period)

  • Self-employeds [SE worker], including those operating as self-employed in 2019, would submit their Schedule C to show net business taxable income. I would suggest (hope) that is prior to the home office deduction.

  • The loan amount is 2.5 times the monthly average payroll calculation shown above, or net income for the SE worker.

  • Yes, today is the first day you can apply. Many banks as of this morning have not released an application. Some larger banks are delaying until Monday until the Feds clarify instructions. Smaller banks seem to be moving forward on it.

ALERT! My staff just spoke to a local bank that is just now holding off, and right now holding a Board meeting to determine if they will back out of supporting the PPP loan.

  • Surely there are other banks taking Apps, but I know of Stearns Bank, Pacific Western Bank (San Luis Obispo to Orange County), First Bank

  • SBA Form 2483 is what smaller banks have distributed as the Application Form. You can access that online, or use the attached. Your bank may use its own form, however.

  • The loan proceeds are to be used over the 8 weeks after funding for payroll, rent (or mortgage interest), and utilities (electricity, gas, water, transportation [not vehicle expenses], telephone, internet access for which service began prior to February 20, 2020)

  • There is a calculation which we are preparing that will allow us to calculate the Forgiveness amount of the loan for planning purposes, but that will be useful after you get the loan – and will basically be based on payroll paid during the 8 week period versus 2019 payroll, change in # of employees [ which we think must mean FTE (full-time equivalent) ], and that 75% of proceeds are used for payroll, rather than rent (or mortgage interest) and utilities

  • Portions of the loan that are not forgiven are paid back over 2 years at 4% with a 6 month interest payment forbearance, changed from the previous 10 year maximum

For the EIDL loan with the sBA, clients on our accounting service who need the 2019 gross revenue and cost of goods (often -0- for service businesses) should be able to get that off their P&L in the financial report. If you cannot locate what you need, email For payroll information needed for the PPP loan application, please email Also, feel free to contact me regarding any specific questions about your situation.

Paycheck Protection Program Application Form:

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