New PPP Interim Final Rule Addresses Loan Forgiveness Requirements

Highlights

• A new Interim Final Rule (IFR) from the U.S. Small Business Administration (SBA) provides that certain owner-employees with less than a 5 percent ownership stake are not subject to the owner-employee compensation rule of the Paycheck Protection Program (PPP) limiting loan forgiveness for owner compensation.
• The IFR also provides that loan forgiveness may not include 1) amounts attributable to tenant, subtenant or household expenses, 2) most rent payments to a related party or 3) mortgage interest payments to a related party.

The U.S. Small Business Administration (SBA) published a new Interim Final Rule (IFR) on Aug. 24, 2020, related to the Paycheck Protection Program (PPP) created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The IFR addresses a) treatment of certain owner-employees and b) limitations on eligibility of certain non-payroll costs for loan forgiveness.