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
The Covid-19 Tax Resource Portal (herein after referred to as "Site") is made available as a service to our clients and others for informational purposes only. These materials and information should not be considered as, or a substitute for, accounting, tax or financial advice. While it is hoped the materials provided here are helpful as background material, it is not warranted either expressly or implied as accurate or complete. You should refrain in taking any action based upon the information provided here until you have received proper counsel.
In addition, you understand that any links to any other web site or services does not constitute endorsement of or warranty of any service, product or information provided on their site(s). These links are provided for convenience only.
While our intent is to make transmissions to and from this web site secure, it is understood that no warranty of security can be made and that unforeseen security breaches by "hackers" is a possibility, however slight.
Reproduction of part or all of the contents on this site in any form is prohibited other than for individual use only. All content on this site is copyright protected and/or trademarked as appropriate and may not be copied, duplicated or altered in any way.
In no event shall Karen L. Vidt, its affiliates or suppliers of any content on this site be liable for any indirect, incidental, special, punitive damages or consequential damages of any kind, or any damages whatsoever arising out of or related to your use of the Site, the content and other information obtained therein.
© 2020 . All Rights Reserved.