PPP Loans: SBA Guidance on Treatment of Owners and Forgiveness of Certain Nonpayroll Costs
On August 24, 2020, the Small Business Administration (the “SBA”) issued an Interim Final Rule on the Treatment of Owners and Forgiveness of Certain Nonpayroll Costs.
Here is an overview of what the Interim Final Rule covers:
- Treatment of Owners:
- An owner-employee in a C- or S-Corporation with less than a 5 percent ownership stake will not be subject to the owner-employee compensation rule
- Eligibility of Certain Nonpayroll Costs for Loan Forgiveness:
- The amount of loan forgiveness requested for nonpayroll costs may not include any amount attributable to the business operation of a tenant or subtenant of the PPP borrower or, for homebased businesses, household expenses
- Rent payments to a related party are eligible for loan forgiveness, as long as (1) the amount of loan forgiveness requested for rent or lease payments to a related party is no more than the amount of mortgage interest owed on the property during the Covered Period that is attributable to the space being rented by the business, and (2) the lease and the mortgage were entered into prior to February 15, 2020. In this context, the related party itself would not also be eligible to request forgiveness for this amount
For more information, the Interim Final Rule can be located here: https://home.treasury.gov/system/files/136/PPP--IFR--Treatment-Owners-Forgiveness-Certain-Nonpayroll-Costs.pdf
The Attorneys at Levene Gouldin & Thompson, LLP are available to provide advice and counsel concerning these new statutory obligations and other matters related to COVID-19.