Frequently Asked Questions

Small Business Administration’s Paycheck Protection Program

Question: Do I send the application form to the SBA?
Answer: No. The entire application process is done through a banking institution. If you are interested in submitting an application, you should contact your bank and ask if they are accredited to process the application. Not all banks in Oregon are. You can find a list of Oregon SBA lenders here and 100 most active national SBA 7(a) lenders here.

Question: On the form it asks of an owner. As a nonprofit, we don’t have owners, so what do we put there?
Answer: Simply put “nonprofit” or leave it blank or follow the instructions of your banker. Do not put the name of your ED or board chair. That may confuse the processing of your application.

Question: Are employee contributions included in the payroll and benefits calculations?
Answer: No. The form is clear that you need to exclude the employee contribution to benefits like insurance, parking, etc. Only include payroll and benefits that are employer paid only.

Question: Is the payroll average based on the most recently completed 12 months, or calendar 2019? For example, if a nonprofit is applying today, is the lookback period 4/1/19 – 3/31/20 or 1/1/19-12/31/19??
Answer: For purposes of calculating “Average Monthly Payroll,” most Applicants will use the average monthly payroll for 2019, excluding payroll costs over $100,000 on an annualized basis for each employee.

Question: We are a camp and do most of our programs in the summer. How do we calculate our average payroll when it varies so much depending on the time of year?
Answer: For seasonal businesses the Applicant may elect to instead use average monthly payroll for the period February 15, 2019 and June 30, 2019 excluding payroll costs over $100,000 on an annualized basis for each employee.

Question: Can we also include payments to subcontractors like bookkeepers or other people that regularly do work for us on a contract basis?
Answer: No. Each business is responsible to submit for their employees. Contractors are not your payroll employees. They can apply for this same program through their business entity.

Question: What if we are an orchestra and have almost all of our performers on 1099s?
Answer: Each of them would need to submit their own SBA PPP application as a sole proprietor.

Question: We submitted for 2.5 months but the "eligible forgiveness" or covered period of the loan is 8 weeks of payroll and the balance would need to be paid back. So why use a 2.5 month calculation in the first place?
Answer: It’s because the 2.5x calculation is based not only on payroll, but the funds can be used (and forgiven) for rent, utilities, and certain other expenses.

Question: I've seen competing guidance about whether or not to include employer-paid payroll federal taxes (FICA) in the calculation for average monthly payroll. The interim SBA guidance neither explicitly includes or excludes these costs.
Answer: Payroll costs are calculated on a gross basis. The SBA has come out with a Borrower Fact Sheet that answers this question - see below. Refer to the PPP Program Info/Resources at the Treasury website for further details. Under the Act, payroll costs are calculated on a gross basis without regard to (i.e., not including subtractions or additions based on) federal taxes imposed or withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act (FICA) and income taxes required to be withheld from employees. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer, but payroll costs do not include the employer’s share of payroll tax. For example, an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes was withheld, would count as $4,000 in payroll costs.

Question: I am applying for the Paycheck Protection Program loan and my bank is asking for our NAICS Code - what is that and where do I find it?
Answer: It's the North American Industry Classification System (NAICS) code. This is not your EIN or your NTEE code. These can be searched for here and it's either a 4-or 6-digit version. The site has been crashing to do the searches, so the next best possibility is to look in the 2017 Manual. They are also asking for the full zip code which is the 5 plus 4-digit version of the code. See NAO's Alert on Paycheck Protection Loans - What Banks Are Asking For where you'll find additional info and some common NAICS codes.

Question: I am unsure about the terms of forgiveness for the Paycheck Protection Program Loan. Do you need to retain your employees only for the length of the loan (8-week period) or through when the forgiveness is being assessed (60 days after the 8-week period when funds were used)? I'm worried that if we get the PPP say for April 15 - June 15, but need to reduce staff in August we will no longer be eligible for forgiveness on the load. Is there a clear policy on this?
Answer: The borrower (you) has to maintain payroll for eight weeks after receiving the loan. Refer to the PPP Program Info/Resources at the Treasury website for further details. Here is an excerpt from the Borrower Fact Sheet.

Question: How much of my loan will be forgiven?
Answer: You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

Updated: April 13, 2020