The SBA released guidance on August 24 regarding on Treatment of Owners and Forgiveness of Certain Nonpayroll costs for PPP.  The following are the highlights and the details can be found in the link below:

 

  • The SBA has long used the term “owner-employee” which can place a cap on the amount of compensation that could be paid to owner-employees and still be forgiven. Based on the new guidance, an owner of a C- or S- Corp is defined as someone with 5% or more ownership.

 

  • Rent to related parties can be counted towards forgiveness, but such rent cannot exceed the mortgage interest owned on the property during the Covered Period and a lease agreement must be in place by 2/15/20.

 

  • A lessor cannot count a percentage of their mortgage interest toward forgiveness that is attributable to tenants. For example, an office building leases out 75% of the available space to tenants, therefore only 25% of mortgage interest can be counted toward forgiveness.

 

  • Subleases do not count toward rent expense.

 

  • Home-based businesses can only include covered nonpayroll expenses that were deductible on their 2019 tax filings.

 

Click here for further details.