Borrower Responsibility Calculations

Does the PPP lender need to be able to replicate the borrower’s payroll calculations?

No.

The responsibility of accurate calculations on payroll costs falls on the borrower. Lenders are expected to perform good faith reviews of PPP Loan applications. In the event the lender identifies errors by the borrower or material lack of substantiation in the borrower’s supporting documents, the lender should work with the borrower to remedy the issue in a timely fashion.

If you are a borrower it is important to read the rules and be as accurate as possible. This will make the approval process much faster.

It is important to note that as a borrower you will be certifying the following:
https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

Pay special attention that you will make this certification: “I further certify that the information provided in this application and the information provided in all supporting documents and forms is true and accurate in all material respects. I understand that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.”

Linked here and pasted below is the text from the official question and answer document published by the Department of the Treasury on April 10, 2020, which you should reference:

https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf

Below is the official question from Q1 as of April 10, 2020

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?

Below is the official answer from Q1 as of April 10, 2020

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.

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