WASHINGTON—The Small Business Administration (SBA) has issued an interim final rule (IFR) it said provides additional guidance concerning the ownership percentage of a borrower that triggers the applicability of the owner compensation rule for Paycheck Protection Program (PPP).
Currently, the rule has a cap on the amount of forgiveness for payroll compensation and there is no exception based on the person’s percentage of ownership. However, the new IFR states that owner-employees with less than a 5% ownership stake in a C or S corporation are not subject to the owner-employee compensation rule, NAFCU explained.
In addition, the IFR provides limitations on certain rental and mortgage interest expenses a borrower might otherwise treat as non-payroll costs for forgiveness. This guidance is specific to amounts attributable to the business operations of a tenant or sub-tenant of a PPP borrower and rent payments to a related party.
For more on PPP loan forgiveness, federal regulators – including the NCUA – will host an interagency webinar with the SBA to provide an overview of the SBA's PPP Loan Forgiveness Platform. The webinar is open to all SBA lenders who participated in the program and is set to begin at 11 a.m. ET today. Register here.