SBA Problems Further PPP Loan Forgiveness Guidance

December 23, 2020

Nonpayroll Expenses

Timing of Payment of Nonpayroll Expenses. Qualified nonpayroll expenses (home loan interest, utility and rent re re payments) incurred before, but paid through the Covered Period, meet the criteria for forgiveness. Eligible nonpayroll expenses incurred during, but paid following the Covered Period, meet the criteria for forgiveness if compensated on or prior to the next billing date that is regular titlemax.us/payday-loans-ky/. Keep in mind that the choice Covered Period can’t be useful for purposes of calculating nonpayroll expenses, whether or not the debtor elects to make use of the choice Covered Period for purposes of calculating payroll expenses.

Interest on Personal Debt. Borrowers can use PPP loan proceeds to cover interest on unsecured credit incurred before February 15, 2020, but expenditures that are such perhaps maybe not entitled to forgiveness.

Renewed Leases or Refinanced Debt. Lease re re re payments made under a renewed rent and interest re re payments made on refinanced home loans meet the criteria for forgiveness in the event that lease that is original home loan existed just before February 15, 2020.

Clarification of Transportation Expenses. The meaning of energy re re payments within the CARES Act includes “transportation costs,” and also the SBA has clarified that “transportation costs” are transportation energy charges evaluated by state or neighborhood governments. 4

Electricity Costs. Electricity expenses qualified to receive forgiveness include supply fees, circulation fees along with other fees such as for instance gross receipts fees, regardless if those quantities are charged on split bills.

Loan Forgiveness Reductions

Refused Employment Has. For purposes of determining a decrease in full-time workers, borrowers must not consist of workers who have been let go and rejected the borrower’s rehire offer. Borrowers must notify the continuing state jobless insurance coverage workplace of these a rejection within thirty days associated with rejection. Borrowers should keep written documents of this offer, the employee’s rejection and efforts to hire an individual that is similarly qualified that will be utilized to supplement the forgiveness application.

Regular Employers. Regular companies must make use of the exact exact same reference that is 12-week in 2019 and 2020 for purposes of determining any reductions to your forgiveness quantity.

2019 Compensation more than $100k. For purposes of determining the full-time worker decrease, borrowers ought to include employees whom obtained more than $100,000 in 2019.

Payment Reductions and Forgiveness Reductions. In cases where a Borrower paid down the income or wages of the covered employee 5 significantly more than 25% throughout the Applicable Covered Period, the forgiveness quantity is paid off by the settlement lowering of more than 25%, unless the decrease is corrected before the early in the day associated with the final time associated with Applicable Covered Period or December 31, 2020. a decrease that is 25% or not as much as the employee’s income or wages will perhaps not lower the forgiveness amount that is eligible.

Determining Salary/Wage Reduction. Whenever reductions that are calculating the forgiveness quantity based on reductions in settlement, just reductions in salaries or wages ought to be utilized.

1 This scenario just isn’t relevant to Borrowers whom elect to utilize the choice Covered Period considering that the Alternative Covered Period begins from the very very first time regarding the pay that is first and, as a result, no payroll expenses is incurred before the Alternative Covered Period.

2 Borrowers who received loan profits just before June 5, 2020, can elect to make use of the initial Covered Period, which will be the 8-week period after the loan disbursement date.

3 The Alternative Covered Period is an option for Borrowers with biweekly, or maybe more regular, payroll schedules. Borrowers whom received loan profits just before June 5, 2020, can elect to make use of the initial Alternative Covered Period, that is the period that is 8-week the very first time regarding the very first pay duration following loan disbursement date.

5 “Covered employee” means a member of staff used by the Borrower through the Applicable Covered Period, having a place that is principal of in the U.S. and annualized settlement not as much as or add up to $100,000 for several pay durations in 2019.

For extra information on this subject, be sure to contact your regular Calfee lawyer or one of the attorneys given below.