Friday night (5.22), the SBA released the first interim final rule related to forgiveness. I’ve summarized the most important aspects of the rule below.
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Wages paid to furloughed employees are included in payroll costs
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Bonus and hazard wages are included in payroll costs
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Owner-employees and self-employed individuals’ payroll compensation can be no more than the less of 8/52 of 2019 compensation or $15,385 per individual across all businesses
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Owner-employees are capped at the lesser of $15,385 or 8/52 of 2019 cash compensation, employer retirement and health care contributions made on their behalf
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Schedule C filers are capped based on their 2019 net profit (8/52)
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General partners are capped by the amount of their 2019 net earnings from self-employment (reduced by claimed section 179 expense deduction and unreimbursed partnership expenses) multiplied by .9235
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Non payroll expenses incurred prior to the covered period and paid during the covered period are eligible for forgiveness (there does not seem to be a cap on how back you can go)
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Borrowers will only face a penalty for a reduction in wages if a salary or hourly rate has been reduced by more than 25%. If a reduction in pay is related to a reduction in hours, the penalty will come from the FTE headcount calculation, not the salary/wage reduction calculation
Many questions remain. Stay tuned for updates and join us for our next live Q&A webinar on Wednesday, 5.27 at 2 PM EDT (Register).
