New PPP Loan Forgiveness Guidelines and Application Released06/17/2020
Earlier this week, the Interim Final Rule on the PPP loan forgiveness application and guidelines, and a new "EZ" loan forgiveness application, was released to incorporate the changes made by the Paycheck Protection Program Flexibility Act and provide additional guidance.
The application and revised interim rules further clarify that, for borrowers using the new 24-week loan forgiveness covered period, the maximum compensation eligible for loan forgiveness is now as follows:
- Per employee has been increased to $46,154 (24 ÷ 52 × $100,000) plus covered benefits such as health care, retirement contributions, and state payroll taxes.
- For owners it is capped at 2.5 months of 2019 compensation, with a maximum of $20,833 (2.5 ÷ 12 × $100,000).
Note: The application specifically lists self-employed individuals, general partners, and owner-employees, so it appears corporation owner-employees are included in this cap.
- Eligible payroll costs do not include any employer health insurance contributions made on behalf of self-employed individuals, general partners, or S corporation owner-employees.
- Employer retirement contributions made on behalf of a self-employed individual or general partner are also excluded from payroll costs.
- Employer retirement contributions on behalf of owner-employees are capped at 2.5 months' worth of the 2019 contribution amount. This limit is included on the EZ application but is not included on the full forgiveness application or in the updated interim final rule. It is possible it will be added in the future.
- Are self-employed and did not list any employees on their original loan application;
- Have employees but are not subject to any loan forgiveness reduction due to salary or full-time equivalent employee reductions.
For more information, contact Michael Ceschini, CPA, CCIFP, CM&AA, Managing Member.