SBA Rule Addresses PPP Forgiveness Questions for Business Owners, Non-Payroll Costs

The Small Business Administration today issued an interim final rule addressing certain technical issues of Paycheck Protection Program loan forgiveness related to business owners and certain non-payroll costs. SBA revised the PPP’s owner-employee compensation rule addressing the amount eligible for forgiveness to exempt employees who own less than 5% of a C-corp or S-corp borrower, determining that owner-employees at this threshold cannot meaningfully influence decisions about the use of PPP loan proceeds.

With regard to forgiveness for non-payroll costs, SBA clarified that monies attributable to tenants or sub-tenants of a PPP borrower or, for home-based businesses,  household expenses, do not qualify for forgiveness. The rule provides examples. Rent payments to a related third party are eligible under certain conditions outlined in the rule.