SBA Releases First Set of Frequently Asked Questions on PPP Loan Forgiveness
August 6, 2020
After a six-week hiatus, the U.S. Small Business Administration (SBA) released new guidance for Paycheck Protection Program (PPP) loan borrowers.
Included in the August 4, 2020, Frequently Asked Questions (FAQs) on PPP Loan Forgiveness, are three notable clarifications from prior guidance impacting PPP loan borrowers:
- Accelerated payments of healthcare coverage and retirement plan contributions;
- Payments made under agreements executed prior to February 15, 2020; and
- Definition of transportation costs that are eligible for loan forgiveness.
Accelerate payments to maximize loan forgiveness? Not so fast.
Earlier guidance indicated that expenses eligible for loan forgiveness included those that were paid or incurred during the Covered Period or Alternative Payroll Covered Period. However, like the previous guidance for mortgage interest, the FAQ notes that forgiveness is not provided for expenses for group health benefits or retirement benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.
I modified my lease or debt agreement after February 15, 2020. Now what?
For payments under lease or mortgage agreements to be eligible for loan forgiveness, they must be related to an agreement executed prior to February 15, 2020. However, the FAQ expands this guidance to clarify that if a lease that existed prior to February 15, 2020, and expires on or after said date is renewed, the lease payments made pursuant to the renewed lease during the Covered Period are eligible for loan forgiveness. Similarly, if a mortgage loan on real or personal property that existed prior to February 15, 2020, is refinanced on or after said date, the interest payments on the refinanced mortgage loan during the Covered Period are eligible for loan forgiveness.
What exactly qualifies as transportation costs?
Guidance relating to transportation has been vague until now. The FAQ clarifies that eligible expenses for loan forgiveness related to a service for the distribution of transportation refers to transportation utility fees assessed by state and local governments.
Let Aprio help.
Aprio has established a dedicated PPP loan forgiveness team that is continuously monitoring new guidance from the SBA, as well as the Treasury, Congress and the IRS, to ensure we have the latest information when advising our clients.
If you would like to discuss how to interpret these new requirements and accurately complete your forgiveness application to maximize PPP loan forgiveness, contact Aprio’s dedicated PPP loan forgiveness team for a consultation.
About the Author
Justin Elanjian, CPA, is the Partner-in-Charge of Aprio’s Paycheck Protection Program (PPP) & Employee Retention Credit (ERC) Services. As a national PPP expert, prominent speaker and strategic business advisor, Justin helps both lenders and borrowers navigate the complexities of the PPP. He also helps his clients realize benefits from other stimulus package programs, such as the ERC, and is committed to strengthening his clients’ balance sheets and helping them achieve what’s next. Justin also leads a team of more than 50 professionals who share his passion for helping businesses maximize the federal COVID relief programs.