On August 4th the Small Business Administration (SBA) in consultation with the Department of Treasury released new guidance on the PPP loan program in the form of Frequently Asked Questions (FAQs) on PPP Loan Forgiveness.
Of the 23 FAQ’s released, there are three key clarifications.
- Limits on owner compensation.
- Clarification on what is included in transportation costs.
- Accelerated payments for healthcare expenses and retirement plan contributions.
Question 8 in the Loan Forgiveness Payroll Cost FAQ section discusses how to determine the amount of owner compensation eligible for forgiveness. The answer is broken down by C Corporation, S Corporation, Self-Employed Schedule C, and General Partner. Details for each of these can be found here. Another important point that was clarified is that the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation is capped at $20,833(24-week) and $15,385(8-week) per individual in total across all businesses in which he or she has an ownership stake.
There has been a lot of speculation around what is included in transportation costs. The SBA has finally clarified the definition as “A service for the distribution of transportation refers to transportation utility fees assessed by state and local governments. Payment of these fees by the borrower is eligible for loan forgiveness.”
Accelerated payments for healthcare expenses and retirement plan contributions
Under the Loan Forgiveness Payroll Costs FAQ section, questions 6 and 7 address expenses related to health care benefits and retirement plan benefits. The answers to both these questions clarify that forgiveness is not provided for group health benefits or employer contributions for retirement benefits accelerated from periods outside the Covered Period or Alternative Covered Period. This is a deviation from earlier guidance given on expenses paid or incurred during the covered period.
At Windham Brannon, we are dedicated to keeping you up to date with the latest Covid-19 activity in our Covid-19 Resource Center. Our team is working around the clock to ensure we stay up to date on the latest guidance and information to assist you and your business during this unique time. For further assistance, please do not hesitate to reach out to your Windham Brannon advisor or email us at email@example.com.