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Paycheck Protection Prpgram

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Level 1

On the PPP application

1) Are payments to subcontractors included in the "Average Monthly Payroll" calculation?,... A client's bank said to include, but I have read differing opinions...

2) Is the K-1 to owners of an "S" corp included in the "Average Monthly Payroll" calculation?,... Again I read differing opinions...

3) What documentation is required,

(I'm assuming by the bank where the application was submitted)..

Thanks in advance, stay healthy / sane

Stan P

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1 Solution

Accepted Solutions
Highlighted
Level 12

I found this:

"On the evening of April 6th, the SBA released the following additional guidance:

  • Amounts paid to independent contractors on Form 1099 do NOT qualify as payroll costs to the payor.
  • The applicant can use either 2019 payroll costs or the last 12 months, whichever they prefer (most will use 2019).
  • Only the salary/wages of an employee is capped at $100,000. The additional payroll costs may be included.
  • Wages are gross. They are not reduced by federal income tax withholding or the employee’s share of payroll taxes. Payroll costs are also not increased by the employer’s share of payroll taxes.
  • An applicant can count costs paid to leased employees."
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"Level Up" is a gaming function, not a real life function.

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6 Replies 6
Highlighted
Level 12

I don't see how you would cover Subcontractors, because they qualify on their own for their own businesses.

https://www.sba.com/funding-a-business/government-small-business-loans/ppp/

https://www.journalofaccountancy.com/news/2020/apr/paycheck-protection-program-ppp-loans-sba-details...

https://www.sba.gov/sites/default/files/2020-04/PPP--IFRN%20FINAL_0.pdf

 

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"Level Up" is a gaming function, not a real life function.
Highlighted
Level 15

3. Documentation is up to each bank.


ex-AllStar
Highlighted
Level 1

Thx, That's what I thought..logically it makes sense

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Highlighted
Level 12

I found this:

"On the evening of April 6th, the SBA released the following additional guidance:

  • Amounts paid to independent contractors on Form 1099 do NOT qualify as payroll costs to the payor.
  • The applicant can use either 2019 payroll costs or the last 12 months, whichever they prefer (most will use 2019).
  • Only the salary/wages of an employee is capped at $100,000. The additional payroll costs may be included.
  • Wages are gross. They are not reduced by federal income tax withholding or the employee’s share of payroll taxes. Payroll costs are also not increased by the employer’s share of payroll taxes.
  • An applicant can count costs paid to leased employees."
*******************************
"Level Up" is a gaming function, not a real life function.

View solution in original post

Highlighted

1) Your payments to subcontractors aren't included because they will be able to apply for the PPP themselves, so you won't be paying them their compensation.

I applied for the PPP through ppp.glossgenius.com and the process was super streamlined with a straightforward application telling you exactly what to upload. They also have a loan calculator in the process to simplify your calculations. 

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Highlighted
Level 1

Thanks to all for the info

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