SBA Updates to Business Loan Program and PPP Treatment of Owners and Forgiveness of Certain Nonpayroll Costs

SBA released interim final rule #24 on 8/24/2020:  https://home.treasury.gov/system/files/136/PPP–IFR–Treatment-Owners-Forgiveness-Certain-Nonpayroll-Costs.pdf 

This IFR covers PPP loan forgiveness requirements relating to: (1) owner-employees with less than a 5% ownership stake in a C- or S- Corporation; and, (2) treatment of non-payroll costs, including amounts attributable to the business operations of a tenant or sub-tenant of the PPP borrower, and rent payments made to a related 3rd party. 

Owner compensation, new 5% threshold in latest IFR. So, it is not subject to the PPP owner-employee compensation rule if own less than 5%. 

Related party rents paid are addressed in the IFR as well–Limited to mortgage interest “owed on the property…”.  So, limit is accrual basis interest expense on the property it would appear. 

Also, interest paid to a related party on a loan that is secured by property, is apparently not eligible for forgiveness.

By Mark Friedlich, Esq., CPA.

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Mark Friedlich

All stories by: Mark Friedlich