SBA Releases New Guidance on PPP Loan Forgiveness

The Small Business Administration (SBA), in conjunction with the U.S. Department of the Treasury recently released new Frequently Asked Questions to clarify several criteria for the forgiveness of Paycheck Protection Program (PPP) Loans.

Congress has approved a total of $659 billion in PPP loans to help small businesses stay afloat and keep their workforce employed through mandatory closures, business disruptions, and other challenges resulting from the COVID-19 pandemic. PPP loan recipients can have their loans partially or entirely forgiven as long as they use the funds for certain eligible expenses and meet other forgiveness requirements.

The 10-page document, released on August 4, 2020, addresses the following topics related to PPP loan forgiveness eligibility:

• Which forgiveness application should be completed by a sole proprietor, an independent contractor, or a self-employed individual with no employees
• Guidance on e-signature validity
• Loan repayment timeline
• Payroll costs eligibility and calculations
• Cash compensation calculations
• Group health plan costs
• Retirement benefits eligibility
• Owner compensation calculations
• Eligible non-payroll costs, including business mortgage interest costs, business rent or lease costs, and business utility costs
• Interest payments eligibility
• Calculation of reduced forgiveness amounts due to reduction in full-time employees, and calculations for seasonal employees

While Congress considers a follow-up to the PPP loan program to further assist small businesses, borrowers and lenders may rely on this latest guidance to determine their eligibility for forgiveness of various costs incurred during the Covered Period to submit the appropriate forgiveness applications.

If you want to learn more or need assistance with your business’ PPP or other relief program loans, contact me or another member of our Business Recovery & Resiliency Team.