Updated Paycheck Protection Program (PPP) Guidance Provided by the Small Business Administration

by | Apr 3, 2020

June 18, 2020 –  Additional changes have been made to this program. Please click here for additional information. 

Interim Final Rule: Business Loan Program Temporary Changes; Paycheck Protection Program

On Thursday evening, April 2, 2020, the Small Business Administration published an Interim Final Rule relating to the Paycheck Protection Program (PPP). This item summarized key provisions of the Paycheck Protection Program and clarified areas where The Coronavirus Aid, Relief, and Economic Security Act (CARES) was either unclear or in the eyes of the SBA, needed to treat certain items with more clarity and specificity. A link to this ruling may be found here: https://home.treasury.gov/system/files/136/PPP–IFRN%20FINAL.pdf

Key Provisions or Clarifications in the Interim Final Ruling

Below we will focus only on those items we deem new, clarified, and key for our clients and in no way does the below purport to be an exhaustive list. Additionally, those items below that are highlighted are those deemed to have ‘changed’ or become ‘clarified’ as part of this ruling:

  • Independent contractors must apply separately from the organizations that pay them. In the CARES Act, it seemed the independent contractor could apply either with the company that paid them or separately. Due to suspected possible abuse, the SBA has issued clarity addressing that independent contractors will need to apply separately. Not only was this clarified in the guide, it was clarified twice!
  • The interest rate on the loans per the Act was to be up to 4.00%, however, shortly after enactment of the CARES Act, the Treasury and SBA issued guidance advising that the rate would be 0.50%. This guide clarifies and corrects the interest rate to 1.00% based on feedback from the banking community.
  • Originally the Act stated that the unforgiven balance of the note could be amortized over a period not to exceed 10 years.   This ruling states that the maturity will be 2 years.
  • The Act also was unclear on the deferment of payments.  It originally stated 6 or 12 months.  This ruling clarifies that the deferment of payments is 6 months from the date of disbursement of the loan and that interest will accrue from the date of disbursement of the loan. 
  • Of the amount being considered for forgiveness, 75% of the loan proceeds must go towards payroll costs.
  • The PPP application will require the borrower to submit SBA Form 2483, Payroll Protection Program Application Form. Lenders likely will have other requirements for making the loan.
  • The ruling also clarifies how the PPP Loan will interact with an existing EIDL loan.  Refer to item 2. r. vii. for additional commentary.
  • What remains unclear is whether a borrower can apply for more than one loan for each entity where they have ownership and/or receive payroll.
  • What also remains unclear is how to calculate the maximum loan amount and potential forgiveness of the loan when the business is a partnership.
  • Hopefully, further guidance comes on this soon.

Clarity is added and as of today, loans are being originated under the PPP program throughout the United States.

As your trusted advisors, we are committed to keeping you well-informed with any new legislation passed by Congress or other authorities as well as any new pronouncements by the Department of Treasury that may affect you. Please do not hesitate to reach out to KHA with any additional questions you may have.  

These sources are simply included for informational purposes. KHA Accountants, PLLC, its partners and others do not provide any assurance as to the accuracy of these items or the information included therein. As such, KHA Accountants, PLLC cannot be held liable for any information derived from referenced sources. This by no means is a recommendation to obtain a loan or attempt to apply for a loan. There are many unknowns at this time regarding what other stimulus (grants or other loan options) that may become available with pending and future bills, executive orders, or emergency declarations to follow, that may become laws. Consult your legal and business advisors prior to making financing decisions. This is intended for illustrative and discussion purposes only.

Real Estate and Cost Segregation

Mar 24, 2026

Learn more about cost segregation studies and found out if performing one is a smart next step for your real estate portfolio.

Building a Family Limited Partnership That Lasts: What High-Net-Worth Families and Business Owners Need to Know

Mar 17, 2026

Most business owners think about succession planning far too late. A Family Limited Partnership, when established early and managed with discipline, gives founders something rare: the ability to transfer economic value to the next generation gradually, deliberately, and on their own terms — without giving up operational control in the process. It is one of the most effective wealth transfer and succession planning tools available. It is also one of the most scrutinized by the IRS. Before you build one, make sure you understand what it takes to make it last.

Manufacturers: A New Tax Break Could Let You Write Off Your Entire Facility on Day One

Mar 3, 2026

Congress just handed manufacturers one of the most significant tax incentives in decades. Under the new One Big Beautiful Bill Act, qualifying businesses can now deduct 100% of the cost of a new production building in the very first year it is placed in service — instead of spreading that deduction over 39 years. For a business investing $5 million, $10 million, or more in a new or expanded facility, that difference could be transformational. But the rules are strict, the election is irrevocable, and the clock is already ticking. Read on to find out if your facility qualifies and what you need to do before you file.

The State Tax Divide: What High-Tax State Residents Need to Know Now

Feb 17, 2026

Two decades ago, 21 states had top income tax rates between 5 and 7 percent. Today, only 12 do. Meanwhile, 26 states now have rates below 5 percent or no income tax at all, while six states have climbed to double-digit rates. With more low-tax alternatives than ever before, businesses and high-net-worth individuals in high-tax states need to consider their options now—before policy changes catch them off guard.

What Every Taxpayer Needs to Know About the 2026 Tax Season

Feb 10, 2026

The 2026 tax filing season brings several significant changes that could affect your refund timeline and filing approach. Between IRS staffing reductions, new postal service postmark rules, and a transition to electronic payments, taxpayers who wait until April to file or who rely on paper submissions may face unexpected delays and penalties. The good news? With a few proactive steps—filing electronically, mailing early, and setting up direct deposit—you can avoid these pitfalls and ensure a smooth filing experience.

529 Plans Explained: How to Save Thousands on Education While Reducing Estate Taxes

Feb 3, 2026

529 plans offer more than just tax-free college savings. From funding K-12 tuition to repaying student loans and even reducing estate taxes, these versatile accounts provide powerful benefits that many families overlook. Learn how to maximize your education savings strategy with step-by-step guidance on setting up, funding, and managing 529 plans for your children or grandchildren.

Beyond the Balance Sheet: Building the Next Generation of Successful Wealth Stewards

Jan 27, 2026

The statistics are sobering: 70% of wealthy families lose their wealth by the second generation, and 90% have depleted it by the third. Yet despite these well-documented trends, most affluent families continue to focus primarily on tax optimization and asset protection while neglecting the most critical element of successful wealth transfer: preparing the next generation to be responsible stewards of family assets.