More of a business’s Paycheck Protection Program (PPP) loan used to pay certain owner-employee salaries can be forgiven under updated guidance from the Small Business Administration (SBA).
The original PPP forgiveness rule stated that any employee who also had a stake in a company – regardless of how small the stake was – that received a PPP loan was eligible to have a maximum of $20,833 of proceeds used to pay the stakeholder’s salary forgiven.
Under the revised guidance, if an owner-employee has an equity stake under 5%, the owner-employee can get a maximum of $46,154 of their salary forgiven.
Forgiveness Limitation for Sub-Leased Spaces
The revised SBA guidance also clarified limitations on sub-leased spaces. While rent and lease payments are forgivable non-payroll expenses, businesses cannot receive forgiveness for the portion of the rent a sub-tenant pays you.
What you need to do. Only approved lenders can submit PPP loan forgiveness applications to the SBA, so stay in touch with your lender about how to fill out the loan forgiveness application.
Also stay in touch with your lender regarding the possibility of blanket forgiveness. There has been a push for blanket forgiveness for smaller loans, which comprise the majority of PPP loans granted. If blanket forgiveness under a certain threshold is granted, it could make most of the current loan forgiveness application process irrelevant in the future.
Last updated: 08/28/2020
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