- No: Household expenses for home-based businesses. “When determining the amount of nonpayroll costs that are eligible for loan forgiveness, the borrower may include only the share of covered expenses that were deductible on the borrower’s 2019 tax filings, or if a new business, the borrower’s expected 2020 tax filings,” the Aug. 24 interim final rule states.
- Sometimes: Rent or lease payments to a related party. According to the Aug. 24 interim final rule – which defines a related party for these purposes as “any ownership in common between the business and the property owner” – these amounts are eligible for forgiveness if:
- “The amount of loan forgiveness requested for rent or lease payments to a related party is no more than the amount of mortgage interest owed on the property during the Covered Period that is attributable to the space being rented by the business, and
- “The lease and the mortgage were entered into prior to .”
“PPP loans are intended to help businesses cover certain nonpayroll obligations that are owed to third parties, not payments to a business’s owner that occur because of how the business is structured,” the Aug. 24 interim final rule states. “This will maintain equitable treatment between a business owner that holds property in a separate entity and one that holds the property in the same entity as its business operations.”
To be eligible for loan forgiveness, nonpayroll costs must be paid or incurred during the Covered Period, which always starts on the date the lender makes a disbursement of the PPP loan
Alternative Payroll Covered Period: “The Alternative Payroll Covered Period applies only to payroll costs, not to nonpayroll costs,” the Aug. 4 FAQ states.
Note, however, that while borrowers must provide documentation of mortgage interest to substantiate these rent and lease payments, mortgage interest payments to a related party are not eligible for forgiveness
Distribution of transportation: The CARES Act includes in covered utility payments a “payment for a service for the distribution of … transportation.” The FAQ clarifies: “A service for the distribution of transportation refers to transportation utility fees assessed by state and local governments. ” (For more information on transportation utility fees, see this Department of Transportation page.)
Electricity supply charges: SBA confirmed in the FAQ that electricity supply charges that are charged separately from electricity distribution charges are eligible for forgiveness: “The entire electricity bill payment is eligible for loan forgiveness (even if charges are invoiced separately), including supply charges, distribution charges, and other charges such as gross receipts taxes.”
- Accounting for employees who declined rehire offers: “In calculating its loan forgiveness amount, a borrower may exclude any reduction in FTE employees if the borrower is able to document in good faith the following: 1) an inability to rehire individuals who were employees of the borrower on , and 2) an inability to hire similarly qualified individuals for unfilled positions on or before ,” the FAQ states. Borrowers must inform the applicable state unemployment insurance office of any employee’s rejected rehire offer within 30 days of the rejection. To show compliance, borrowers should maintain documentation including “the written offer to rehire an individual, a written record of the offer’s rejection, and a written record of efforts to hire a similarly qualified individual.”
- Accounting for employees who made more than $100,000 in 2019: One question in the FAQ asks, “When calculating the FTE Reduction Exceptions in Table 1 of the PPP Schedule A Worksheet on the Loan Forgiveness Application (SBA Form 3508 or lender equivalent), do borrowers include fast auto and payday loans Coshocton OH employees who made more than $100,000 in 2019 (those listed in Table 2 of the PPP Schedule A Worksheet)?” SBA responds in the affirmative: “The FTE Reduction Exceptions apply to all employees, not just those who would be listed in Table 1 of the Loan Forgiveness Application (SBA Form 3508 or lender equivalent). Borrowers should therefore include employees who made more than $100,000 in the FTE Reduction Exception line in Table 1 of the PPP Schedule A Worksheet.”