The Small Business Administration has revised guidance on the Paycheck Protection Program loan amounts eligible for forgiveness.
Payroll costs up to $100,000 of annualized pay per employee continue to be eligible. Now that the covered period can be extended to 24 weeks, the maximum payroll cost per individual is $46,154. If you continue to use 8 weeks as the covered period, the maximum payroll cost per individual translates to $15,385.
Health care expenses, retirement contributions and state employment taxes continue to be eligible as payroll costs, except these costs for owner/employees are not eligible.
The revised guidance further limits owner/employee and self-employed individuals compensation eligible for forgiveness. Per the loan forgiveness application instructions, you can calculate amounts paid:
- For borrowers using a 24-week covered period, the amount is the lower of $20,833 (the 2.5 month equivalent of $100,000 per year) for each individual, or the 2.5 month equivalent of their applicable compensation in 2019.
- For borrowers using an 8-week covered period, the amount is the lesser of $15,385 (the eight-week equivalent of $100,000 per year) for each individual, or the eight-week equivalent of their applicable compensation in 2019, whichever is lower.
Qualified leave and qualified family leave are not eligible for loan forgiveness if a credit is claimed for this leave.
Mortgage interest incurred, rent, and utility payments for agreements that began before February 15, 2020 continue to be eligible costs.
At least 60% of the loan amount forgiven must be related to payroll. If the 60% is not met, a portion of the loan will not be forgiven.
For more information, please contact us at 401-831-0200 if you have questions or would like to discuss how these revisions apply to your situation.