The SBA has released new guidance on PPP loan forgiveness. This guidance provides the following clarifications on prior PPP-related legislation:
Owner exemption from the PPP owner-employee compensation rule - Owner-employees with less than a 5 percent ownership stake in a C or S Corporation are not subject to the owner-employee compensation rule. This exemption is intended to cover owner-employees who have no meaningful ability to influence decisions over how loan proceeds are allocated.
Eligibility of certain non-payroll costs - The amount of loan forgiveness requested for non-payroll costs may not include any amount attributable to the business operation of a tenant or sub-tenant of the PPP borrower, nor can it include household expenses for home-based businesses.
Eligibility of rent payments to a related party - Rent payments to a related party are eligible provided that (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.
The SBA may provide further guidance, if needed, through SBA notices that will be posted on their website at www.sba.gov. If we can assist you with any questions regarding this new guidance, please let us know.
You can read the complete interim final rule here.