The Small Business Administration released a new interim final rule this week, effective 8/24, to address the Treatment of Owners and Forgiveness of Certain Nonpayroll Costs.
Items to note:
Amounts attributable to the business operation of a tenant or subtenant may not be considered for eligible nonpayroll costs. The document provides some examples for shared leases and mortgages (including home-based businesses).
Rent to related parties may be eligible nonpayroll costs so long as the amount of the loan forgiveness requested for rent or lease payments to a related party is no more than the amount of mortgage interest owed on the property during the covered period that is attributable to the space being rented by the business. Keep in mind that the lease/mortgage must have been entered into prior to February 15, 2020.
Finally, there appears to be clarification regarding owner-employees with less than 5% ownership in C or S corps: they are not subject to the owner-employee compensation rule. The exemption is intended to cover owner-employees who have no meaningful ability to influence decisions over how loan proceeds are allocated.
We will continue to be on the lookout for these items as we prepare forgiveness applications.