U.S. Treasury Releases New Loan Forgiveness Guidance

At Gettry Marcus CPA, P.C. we continue to stay up to date on the recent developments regarding the Paycheck Protection Program (“PPP”), as provided by the U.S. Treasury. On Tuesday, August 4, 2020, the U.S. Treasury released Paycheck Protection Program Frequently Asked Questions (“FAQs”) on PPP Loan Forgiveness.  

The FAQs included twenty-three questions and answers related to: (i) General Loan Forgiveness; (ii) Loan Forgiveness Payroll Costs; (iii) Loan Forgiveness Nonpayroll Costs; and (iv) Loan Forgiveness Reductions.  Certain provisions and clarifications included in the FAQs are:  

  • Payroll costs incurred before the Covered Period, but paid during the Covered Period are eligible for loan forgiveness;
    • For example, a borrower who received PPP loan funds on April 20, 2020, and disbursed payroll on April 24, 2020 for the pay period ending April 18, 2020, can utilize this payroll towards loan forgiveness;
  • Borrowers who pay payroll twice a month or less frequently (i.e. semi-monthly or monthly payers) will need to calculate payroll costs for partial pay periods;
  • Payroll costs include all forms of cash compensation paid to employees, including tips, commissions, bonuses and hazard pay;
  • Forgiveness is not provided for group health care benefits and retirement benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period;
  • Owner compensation calculations are as follows (using a 24-week Covered Period for illustrative purposes, calculations are different for an 8-week Covered Period):
  • Payments of interest on business mortgages on real or personal property (such as an auto loan) are eligible for loan forgiveness.  Interest on unsecured credit is not eligible for loan forgiveness;
  • Leases that existed prior to February 15, 2020, but renewed during the Covered Period are eligible for loan forgiveness as the U.S. Treasury considers this an extension of the original lease;
  • Utility payments for distribution of transportation refers to transportation utility fees assessed by state and local governments.  

See the below link for the full version from the U.S. Treasury.–Loan-Forgiveness-FAQs.pdf

If you would like additional information please contact your Gettry Marcus Advisor or Gabe Shurek, or Nicholas Backmann the authors of this article.