The SBA released guidance this week, updating some nuances and details around PPP forgiveness. This morning I will share a quick summary of the key points.
- Owner-employees with less than a 5% stake in an S corp or C corp are not subject to the owner-employee compensation rule. The likely rationale here is that these individuals have no real say in how the money is spent.
- If you have a tenant, it will influence how much forgiveness you can get for either interest on your mortgage or rent. If you rent a building and sublease a piece of it, you need to subtract the amount you earn from your sublease from your application. If you own a building and lease a portion of it, you need to remove the lease income from your interest expense.
- What happens if you own your building through a different company, and your operating company pays the rent? Under the new guidance, these rent payments can be eligible for forgiveness, as long as the rent is not more than the amount of interest owned for that piece of the building.
As more information becomes available on PPP forgiveness, we will do our best to share and summarize them here.