On August 24, the Small Business Administration and Treasury released new guidance regarding Paycheck Protection Program (PPP) forgiveness issues. The new interim final rule covers two areas: owner-employee compensation and the eligibility of nonpayroll costs. A recent article from the Journal of Accountancy offers a concise summary of the new guidance.
Owner-employee compensation – For the purposes of calculating loan forgiveness, C-corporation and S-corporation owners who hold less than a 5% stake qualify as exempt from the PPP rule regarding owner-employee compensation, because they are deemed to not have a meaningful ability to influence the allocation of PPP loan proceeds.
Eligibility of nonpayroll costs – The new interim rule addresses situations where a business owner holds property in a separate entity and where a business owner holds property in the same entity as its business operations. The goal of the guidance is to establish equitable treatment for these situations.
For further details, including a number of hypothetical scenarios illustrating various nonpayroll cost situations, click here to read the article in full at the Journal of Accountancy.