InfoBytes Blog
SBA clarifies PPP forgiveness for certain business owners, non-payroll costs
On August 27, the Small Business Administration (SBA) issued a new interim final rule (IFR), which provides additional guidance for Paycheck Protection Program (PPP) lenders on the treatment of business owners and the forgiveness of certain non-payroll costs. The new IFR specifies that “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.” The SBA explained that the exemption, which was decided upon in consultation with the Secretary of Treasury, is intended to cover owner-employees who “have no meaningful ability to influence decisions over how loan proceeds are allocated.” With respect to the forgiveness of certain non-payroll costs, the SBA clarified that costs attributable to the business operations of tenants or sub-tenants of a PPP borrower or, for household expenses of home-based businesses, do not qualify for forgiveness. However, rent payments to a related third party are eligible for loan forgiveness under certain conditions. The IFR takes effect upon publication in the Federal Register. Comments on the provisions are due within 30 days.