April 3, 2020
Hi There!

Here is an update on the Paycheck Protection Plan (PPP) loans, including what we are seeing and hearing:

You do not need to provide any documentation to banks at this point. No payroll returns, no tax returns. The only numbers you need are (1) your average monthly payroll multiplied by 2.5 and (2) the number of employees you have. 

Here is an easy calculation of average payroll:

  • Start with your total wages for 2019.
  • Subtract wages paid to each employee over $100k. You can only count the first $100k per person.
  • Add in 7.65% for employer payroll taxes. Note: This should not be included in your calculation. We apologize for the confusion.
  • Divide by 12 months.
  • Add in your monthly health insurance cost (employer paid portion).
  • Add in partial pension matching (can’t be any more specific than that.)

If you are an owner and do not take payroll like your employees, you can include your net taxable income as part of the wages, up to $100k.

Self-employed individuals (those with no employees) and independent contractors can apply and receive loans starting on April 10.

Are the banks prepared for this process? The Bank of America process is very easy if you have a client profile set up already. Other banks are still working on getting their process set up. Please keep calling your bank for updated information.

Please pay very close attention to the certifications at the end of the application. You need to certify that as an employer this loan is necessary to keep your staff paid, whether they are working or not, due to economic hardship. Keep in mind it is possible that, as events unfold, the government will require some type of documentation to prove an economic hardship.

We have already seen a couple of clients opt out of the loan because – even though they have a financial inconvenience – they have not had a drastic decrease in business and, therefore, would not be able to prove it later.

Please remember, this loan is intended for you to keep paying your employees, whether they are working or not, and keep them off unemployment. You will have to prove your need in eight weeks.

We would appreciate your feedback on how your banks/applications are going so we can keep others informed. Email me .

Again, please be aware of scams. Beware of ads/emails requesting your private information to help you get the loans. The applications only come from your bank.

Thank you and stay safe!

Rich Pavano, CPA