As the pandemic continues to impact so many aspects of life in around the world, and especially in the United States, the economic response continues to evolve as well. Many of the answers to questions raised regarding the Paycheck Protection Program (PPP) which was passed in order to fund forgivable loans of up to $10 million per qualifying business to cover payroll, mortgage interest, rent and utilities, have been published over the last several weeks. But some questions and confusion remains.
 
Further clarification is still forthcoming as the U.S. Small Business Administration (SBA), in consultation with the U.S. Treasury, released additional guidelines on Tuesday, August 4, 2020 addressing the forgiveness portion of the PPP loans.
 
This week’s notification is divided into four major sections that cover the forgiveness process and the calculations to determine the amount of forgiveness. Each section includes responses to a number of FAQs and several practical examples to provide helpful explanations.
 
Here is a brief synopsis of the basic areas addressed in this latest directive: 
  • General Loan Forgiveness
    • Discusses calculations for sole proprietors, independent contractors and self-employed individuals who had no employees at the time of PPP
  • Loan Forgiveness Payroll Costs
    • Discusses how to determine the amount of owner compensation that is eligible for forgiveness, referencing C and S Corps, self-employed Schedule C filers, general partners and LLC owners
  • Loan Forgiveness Non-payroll Costs
    • Discusses and confirms that payments of transportation utility fees assessed by state and local government are eligible for loan forgiveness
  • Loan Forgiveness Reductions
    • Discusses how borrowers should calculate the reduction in their loan forgiveness amount arising from reductions in employee salary or hourly wage 
 
Please note - More than $130 billion in funding remains available through PPP. The deadline for filing an application is August 8, 2020.
 
With questions still outstanding, we will continue to monitor the progress of the SBA and share all the news with you as it becomes available.