- TAKE the aggregate payroll costs from the last 12 months for employees who are US residents.
- SUBTRACT compensation in excess of any salary exceeding $100,000 annually.
- DIVIDE the total by 12 to determine average monthly payroll.
- MULTIPLY the average monthly payroll by 2.5.
- ADD any outstanding amount of any EIDL loan made between January 31, 2020 and April 3, 2020, LESS the amount of any advance made under the EIDL loan.
The Rule explains that the highest allowable interest rate on PPP loans is set at 1% (in contradiction to previous information guidance that interest rates would be .5%) and the maturity date for such loans will be two years (in contradiction to the CARES Act’s provision that the loan term for any amount not forgiven would be ten years).
Underwriting and Other Information for Lenders
The SBA will allow lenders to rely on the certifications of the borrower in order to determine the borrower’s eligibility for a PPP loan and the maximum loan amount the borrower is entitled to receive. Lenders will be held harmless for the borrower’s failure to comply with program and certification criteria.
- Confirming receipt of borrower certifications;
- Confirming receipt of information demonstrating that the borrower had employees as of February 15, 2020;
- Confirming average monthly payroll costs by reviewing the payroll documentation provided by borrower; and
- Complying with the Bank Secrecy Act (BSA).