All articles in this COVID-19 Response Resource issue are effective as of April 3, 2020.

The Treasury Department released its Interim Final Rule providing guidance to lenders and borrowers regarding the Paycheck Protection Program (PPP) established by the CARES Act. The Rule changes earlier understanding of the PPP loan program, including earlier direction from the Treasury Department, in some significant respects.  

First, payments to independent contractors do not count as payroll costs for purposes of either the PPP loan amount or loan forgiveness. The amount of a PPP loan is the borrower’s average monthly payroll costs multiplied by 2.5. While the language of the CARES Act itself suggested that such costs could count towards “payroll costs,” the Rule states that payments to independent contractors do not count in the calculation of payroll costs. Independent contractors are expected to file for their own PPP loans. 

Second, the CARES Act states that the interest rate on a PPP loan would be not more than four percent for a term of not more than 10 years. Initial guidance from the Treasury Department indicated that the interest rate would be set at .5 percent for a term of two years. The Rule clarifies that the interest rate on PPP loans will be one percent for a term of two years. Thus, any loan proceeds under a PPP loan that are not forgiven must be paid back within two years at an interest rate of one percent. The first six months of loan payments are deferred.   

Third, a significant incentive of the PPP loan program is loan forgiveness. The proceeds of a PPP loan may be forgiven to the extent they are used on payroll, rent, interest and utility payments during the first eight weeks of the loan. The Rule clarifies that no more than 25 percent of the amount of loan forgiveness may be based on non-payroll costs. 

Additional resources and the final application for the PPP loan program are available here:

For questions about this or other employment or business-related questions contact:

Sean Monson at (801) 536-6714 or send an email to
Ross Keogh at (406) 206-9710 or send an email to  
Matt Cook at (801) 536-6819 or send an email to