CLIENT ALERT: The Small Business Administration (“SBA”) and the Treasury Department Issue a Frequently Asked Questions (“FAQ”) on the Paycheck Protection Program

By , | Published On: April 8, 2020

Last Friday, April 3, 2020, eligible borrowers began submitting applications for business loans under the newly authorized “Paycheck Protection Program.”  Despite the Small Business Administration’s (“SBA”) final interim rule issued on April 2, 2020, borrowers and lenders were left with many questions.  In response, the SBA and Treasury Department recently released a Frequently Asked Questions (“FAQ”) on the Paycheck Protection Program.

In the FAQ, the SBA provides answers to some key remaining questions.  First, the SBA clarifies that small business concerns are eligible even if they have more than 500 employees, as long as they meet the definition of a “small business concern” in 15 U.S.C. § 632[1]; and clarifies that the “alternative size standards” at 15 U.S.C. § 632(a)(5) are applicable to the Paycheck Protection Program.[2]

Additionally, the FAQ document clarifies that, in calculating the maximum loan amount, the exclusion of employee compensation in excess of an annual salary of $100,000 from “payroll costs” only applies to cash compensation and does not apply to non-cash benefits such as: (i) employer contributions to retirement plans; (ii) payments for the provision of employee health care coverage; and (iii) payments of state and local taxes assessed on compensation of employees.[3]

Finally, the SBA reiterated that payments to independent contractors do not constitute “payroll costs” of the borrower.[4]

This client alert addresses a few critical questions and answers in the FAQ and is not an exhaustive list.  The full FAQ can be accessed here.

The SBA and the Treasury Department intend to update this web-based FAQ document on a regular basis as the Paycheck Protection Program continues to develop daily.  As such, both borrowers and lenders are encouraged to routinely check it for further updates.  It may be accessed here.

For more information on the Paycheck Protection Program, other recently established federal loan programs, and questions about how these opportunities fit together with other federal programs your organization currently carries out, please do not hesitate to contact FTLF attorneys: Michael B. Glomb and Scott S. Sheffler, or call FTLF at (202) 466-8960.


Webinar: On April 16, 2020 at 1 PM ET, FTLF is hosting a webinar explaining the new loan programs, including answers to your questions on eligibility, applications, allowable uses, and requirements for loan forgiveness. Learn More or Register Here.

[1] Businesses can satisfy this definition on either employee-based or revenue-based size standards for the industry in which they operate in.  For a list of size standards for particular industries, please reference 13 § C.F.R. 121.103.

[2] Paycheck Protection Program Loans, Frequently Asked Questions (“FAQs”), Question & Answer 2, dated April 6, 2020, available at

[3] Id. at Question & Answer 7.

[4] Id. at Question & Answer 15.