On August 4, 2020, the U.S. Small Business Administration (SBA) issued the long-awaited FAQ on PPP loan forgiveness.
On August 4, 2020, the U.S. Small Business Administration (SBA) issued the long-awaited FAQ on PPP loan forgiveness. The complete Frequently Asked Questions on Loan Forgiveness is available on the US Treasury website.
The key takeaways are:
1. Forgiveness is not provided for employer contributions for retirement benefits accelerated from periods outside the Covered Period or Alternative Covered Period (Question #7).
2. C-corporation owner-employee(s) (Question #8):
3. S-corporation owner-employee(s) (Question #8):
For the first time, the 2% threshold and family attribution rules have appeared in the issued guidance. Currently, it appears that the 2% threshold and family attribution rules only applies to health insurance for S-corporation owner-employee(s). So far, there is no mention of family members being subject to the cash compensation cap for S-corporation owner employee(s).
FAQ #8 has established a separate cap for employer retirement contributions for C-corporation and S-corporation owner-employees, which appears to be separate from the cash compensation limit.
4. Self-employed Schedule C (or Schedule F) filers (Question #8):
5. General Partners (Question #8):
6. Interest on unsecured credit is not eligible for loan forgiveness because the loan is not secured by real or personal property (Question #4). Unfortunately, there was no further clarification on whether interest on a line of credit secured by real or personal property would qualify as a nonpayroll cost.
7. Interest on unsecured credit incurred before February 15, 2020 is a permissible use of PPP loan proceeds, this expense is not eligible for forgiveness (Question #4).
8. Payments made on recently renewed leases or interest payments on refinanced mortgage loans are eligible for loan forgiveness if the original lease or mortgage existed prior to February 15, 2020 (Question #5).
9. Under utilities, transportation refers to transportation utility fees assessed by state and local governments. Payment of these fees by the borrower is eligible for loan forgiveness.
10. More than 25% reduction in cash compensation is calculated as follows (Question #4):
11. Salary/hourly wage reductions in excess of 25% only applies to cash compensation (Question #5)
We have developed the blumshapiro PPP Loan Forgiveness Toolkit & Calculator. We will continue to update the Toolkit as additional guidance becomes available. As long as the blumshapiro PPP Loan Forgiveness Toolkit & Calculator is downloaded via blumshapiro.com, all downloaders will get notified of any changes to the PPP Loan Forgiveness Toolkit & Calculator.
blum has been on the forefront of interpreting PPP guidance and providing trusted resources for clients to keep them apprised of constant changes and providing the most up-to-date information to assist in calculating loan forgiveness. Our team is working with clients to assist them with navigating through compliance requirements of the loan forgiveness program, to ensure forgiveness is received, help expedite the loan forgiveness process and provide a reliable and trusted source of information. Learn more about our loan forgiveness services >>
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Disclaimer: The contents of this resource are for general informational purposes only. While every effort has been made to ensure its accuracy, the information is provided “as is” and no representations are made that the content is error-free. We have no obligation to update any content, comments or other information for retroactive or prospective interpretations or guidance provided by regulators, financial institutions or others. The information is not intended to constitute legal advice or replace the advice of a qualified professional. There are areas of the CARES Act where additional clarification from the Treasury Department and the SBA is needed. Your judgment and interpretation of the act may be needed. Users should consult with their legal counsel and representatives of the lending institution regarding the proper completion of their application and supporting documentation.