PPP Loan Forgiveness Application: Costs Eligible for Forgiveness
Each week we will provide a detailed explanation of computations included on the SBA prepared PPP loan forgiveness application. In this article, we will review the payroll and nonpayroll costs eligible for loan forgiveness.
Borrowers are eligible for forgiveness for payroll costs paid or incurred during the 8-week covered period or alternative payroll covered period. Payroll Costs include the following:
- Cash compensation
- Employer contributions for employee health insurance
- Employer contributions to employee retirement plans
- Employer state and local taxes assessed on employee compensation
- Compensation to self-employed individuals/general partners
Borrowers are eligible for forgiveness for nonpayroll costs paid or incurred during the 8-week covered period. Nonpayroll costs include the following:
- Payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15,2020
- Business rent or leases payments pursuant to lease agreements for real or personal property in force before February 15, 2020
- Business payments for electricity, gas, water, transportation, telephone or internet access for which service began before February 15, 2020.
All eligible nonpayroll costs must be paid or incurred during the covered period. If incurred during the covered period, it must be paid on or before the next regular billing date, even if the billing date is after the covered period. Eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount.
Reach out to our team if you have any questions on the payroll and nonpayroll costs eligible for loan forgiveness. Stay tuned for future topics on the PPP loan forgiveness application.