SBA publishes FAQ on PPP loan forgiveness | Husch Blackwell LLP
As the Small Business Administration (SBA) prepares to accept remittance documents from lenders through its Paycheck Protection Program Forgiveness Platform (PPP) on August 10, 2020, the SBA issued Frequently Asked Questions (FAQ) relating to the cancellation of PPP loans. These forgiveness FAQs reinforce previously published guidelines and provide new information to help borrowers prepare for loan forgiveness requests. This alert reviews the new PPP forgiveness guidelines within the SBA Frequently Asked Questions and builds on our previously published Loan Forgiveness FAQ.
Expenses for group accelerated health and retirement benefits are not eligible expenses
Employer expenses for employee group health care and retirement benefits that are paid or incurred by the borrower during the covered period or the alternate payroll coverage period are eligible salary expenses. However, the SBA has clarified that these eligible costs do not include expenses for group health care and accelerated retirement benefits from periods outside of the period covered or the period covered by the alternative payroll. In addition, group health care benefits paid by employees are not reimbursable labor costs.
Clarification on reimbursable transport costs
Until now, there was speculation that the “transportation” costs included, for example, reimbursement of mileage and / or fuel costs. The SBA clarified that eligible “transportation” costs are limited to utility transportation charges assessed by state and local governments.
Calculating the reduction in loan forgiveness
The CARES Act requires that the borrower’s rebate be reduced for certain employees whose wages / hourly wages have been reduced by more than 25%. The SBA has clarified that, in calculating these reductions in the amount of loan forgiveness, borrowers should only consider wage or salary cuts, and not other forms of compensation.