FINRA's BrokerCheck

Paycheck Protection Program

During this webinar, our presenters discuss what we know about the forgiveness process, a breakdown of the forgiveness application and areas where more clarification/guidance is needed.


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FAQ Last Updated on April 16, 2020


February 15th, 2020 through June 30th, 2020.

The application period for this program is currently open. The loans are provided through SBA approved lenders. The Paycheck Protection Loans are not available on the SBA website, unlike other SBA programs.

The outstanding amount of a loan that was made under the SBA’s disaster loan program may be refinanced as part of this new loan program. This should be discussed with your lender.

The SBA has several programs available for self-employed individuals and independent contractors. However, the lending base cannot be the same and the Paycheck Protection Program is the only program that includes a built-in forgiveness component. Learn more here.


  • Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
  • Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of 500 employees or the SBA industry size standard if more than 500
  • Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
  • Sole proprietors, independent contractors, and self-employed persons
  • Partnerships and S corporations should apply for loans at the entity level
  • Any individual who is regularly carrying on a trade or business that was in operation on February 15, 2020
  • Includes individuals who have filed or will file a 2019 Schedule C as a sole-proprietor or a single member LLC

Businesses that were not in existence between February 15, 2019 and June 30, 2019 may qualify. The amount of the loan will be based on 2.5x the average monthly payroll costs incurred from January 1, 2020 through February 29, 2020.

Loan Details and Forgiveness

The maximum loan amount is 2.5x the average total monthly payments for payroll costs incurred for the prior year before the loan is made. Seasonal employers may use an alternate measuring period.

Payroll costs are defined as:

  • Salary, wage, commission or similar compensation, cash tip or the equivalent
  • Parental, family medical or sick leave
  • Allowance for dismissal or separation
  • Group health care benefits
  • Retirement benefits
  • State or local tax assessed on the compensation
  • Self-employed individuals may receive income based on their Schedule C filing for 2019

Payroll provided through the Families First Act may not be included. Compensation per employee is maxed at $100,000. Other considerations:

  • Amounts paid to 1099 recipients (independent contractors) are specifically excluded as those recipients are eligible to apply for their own loans.
  • Rehmann advisors can help you calculate the lending base.

For the calculation of the average monthly payroll cost, applicants should use gross payroll (including tax expenses) — based on 2019 or the previous twelve months' data — for the PPP loan application and forgiveness.

Self-employed individuals must use their 2019 Schedule C data and may not include healthcare and retirement benefits for themselves; however, they may include those items for their employees.

The loan may be used to cover payroll, health insurance, commissions, mortgage interest, rent or utilities. Loans received through the SBA 7(a) programs cannot be combined with other SBA programs to cover the same type of costs.

Various interest rates have been discussed. As of April 6, the rate is 1% a year, fixed.

All or a portion of the loan principal can be forgiven. The amount eligible for forgiveness is the total of the following costs incurred over eight weeks after receiving the loan: payroll, interest rent and utilities. Current guidelines state that of the total, no more than 25% of the proceeds should be used for non-payroll related items. Other considerations:


  • Loan forgiveness is dependent upon retaining employees during the eight weeks after the loan is received.
  • Loans do not require a personal guarantee and do not require collateral.
  • A self-employed individual's forgiveness amount is calculated on 8/52 week payroll period.

The forgiveness cannot include:


  • Social security taxes or Medicare taxes – IRC Chapter 21
  • Railroad Retirement Tax Act taxes – IRC Chapter 22
  • Federal income taxes withheld
  • Compensation paid to employees living outside of the U.S.
  • Payroll paid under the Families First Act

If you have a balance outstanding – after determining the amount forgiven – it will be treated like a traditional amortizing loan. Maximum loan term is two years. Payments are deferred for first six months.

Your lender will guide you through the process. Some of the documents you may need might include:

  • Payroll reports for the last 12 months
  • Payroll reports for the last calendar year
  • Documentation of health insurance for all employees
  • Documentation of retirement plan funding
  • Sole proprietor’s Schedule C filing reflecting gross and net self-employment income

The Paycheck Protection Program refers to net self-employment income for determining the lending base for self-employed individuals (Schedule C filers). Those to whom you pay a commission – who are 1099 recipients – are eligible to apply for a loan.



Published in COVID-19