May 26, 2020
On Friday, May 22, the U.S. Small Business Administration (SBA) released updated guidance regarding requirements for loan forgiveness under the Paycheck Protection Program (PPP).
The 26-page interim final rule provides additional clarity around what costs and payments may be eligible for forgiveness. Among other provisions, the guidance states that eligible “costs and payments” include: payroll costs (e.g., salary, wages or similar compensation, payments for group health coverage), interest on mortgage obligations, rent and utilities. Additionally, the guidance clarifies that salary and wages to furloughed employees, bonuses and hazard pay qualify as eligible payroll costs.
To address concern that borrowers need additional time and flexibility to spend loan funds, the U.S. House of Representatives will consider bipartisan legislation this week to allow forgiveness for expenses beyond the 8-week covered period and to also eliminate restrictions limiting non-payroll expenses to 25 percent of loan proceeds. The U.S. Senate is expected to take up the measure when it returns from the Memorial Day recess.