The Small Business Administration (SBA), in consultation with the Department of the Treasury,
intends to provide timely additional guidance to address borrower and lender questions
concerning the implementation of the Paycheck Protection Program (PPP), established by section
1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). This
document will be updated on a regular basis.
Borrowers and lenders may rely on the guidance provided in this document as SBA’s
interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rules
(“PPP Interim Final Rules”) (link). The U.S. government will not challenge lender PPP actions
that conform to this guidance, 1 and to the PPP Interim Final Rules and any subsequent
rulemaking in effect at the time.
1. Question: Paragraph 3.b.iii of the PPP Interim Final Rule states that lenders must
“[c]onfirm the dollar amount of average monthly payroll costs for the preceding calendar
year by reviewing the payroll documentation submitted with the borrower’s application.”
Does that require the lender to replicate every borrower’s calculations?
Answer: No. Providing an accurate calculation of payroll costs is the responsibility of
the borrower, and the borrower attests to the accuracy of those calculations on the
Borrower Application Form. Lenders are expected to perform a good faith review, in a
reasonable time, of the borrower’s calculations and supporting documents concerning
average monthly payroll cost. For example, minimal review of calculations based on a
payroll report by a recognized third-party payroll processor would be reasonable. In
addition, as the PPP Interim Final Rule indicates, lenders may rely on borrower
representations, including with respect to amounts required to be excluded from payroll
costs.
If the lender identifies errors in the borrower’s calculation or material lack of
substantiation in the borrower’s supporting documents, the lender should work with the
borrower to remedy the issue.2
