Redpath Insights

SBA PPP FAQ August updates

PPP Loan Forgiveness FAQ Updates for August

by Alex Helkamp, CPA, CCIFP

August 7, 2020 - On August 4, the Small Business Administration (SBA) released additional FAQs on Paycheck Protection Program (PPP) loans. They include information applicable to business owners, independent contractors, self-employed individuals, employees, lenders, and others on various aspects of loan forgiveness, and there are a few key areas we want to highlight.

Ownerโ€™s Compensation Limit

The owner/employee compensation capโ€”which you can also read about in our recent articleโ€” applies across all businesses in which an individual has ownership including an S Corporation, C Corporation, partnership, or sole proprietorship. This is the first guidance that places an ownership compensation limit in the aggregate to all businesses an individual has an ownership interest in. The allocation of the limit across these businesses will be selected by the borrower.

New Guidance Related to Health Insurance and Retirement Plan Expenses

The FAQ includes a forgiveness limitation on payments for any health insurance and retirement plan expenses that are accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.  It appears that health insurance and retirement plan expenses accrued prior to the Covered Period but paid during the Covered Period are eligible for forgiveness, but prepayments of these expenses are not eligible for forgiveness. FAQ 8 also includes additional guidance for owner(s)/employees, which provides that borrowers using a 24-week covered period are limited to 2.5/12ths of 2019 health insurance and retirement plan expenses for owner(s)/employees.   

Covered Utility Payments

These are eligible for forgiveness and include a โ€œpayment for a service for the distribution of โ€ฆ. transportationโ€ under the CARES Act. Prior to this new guidance, there was uncertainty as to which transportation costs could be counted as covered utility paymentsโ€”the FAQ clarifies that eligible expenses include transportation utility fees assessed by state and local governments. 

You can click here to read the FAQs in their entirety.

We are keeping a close lookout for new developments that matter to your bottom line. In the meantime, consider utilizing our compilation of resources to maintain your financial health.

COVID-19 CARES Act

Alex Helkamp, CPA, CCIFP

Alex Helkamp, CPA, CCIFP

Alex Helkamp, CPA and CCIFP, is a director in the business tax service area at Redpath and Company. As tax leader on the construction, real estate, and engineering industry team, he assists clients with business tax planning, implementation of accounting standards, mergers and acquisitions transactions, and other accounting services. Having earned his CCIFP certification in 2017, Alex maintains a vast knowledge of construction industry issues and tax challenges faced by companies in the industry. Clients appreciate his insights to help them defer taxes, minimize tax liabilities, recognize tax credit opportunities, and free up cash flows. Alex enjoys meeting with his clients as much as possible throughout the year to discuss their goals and objectives, understand their unique needs, and help them find solutions that maintain their business and financial health. He is a frequent speaker on topics related to the construction industry and he has provided public accounting services at Redpath and Company since 2011.