Derek Carter
Interim Final Rule Update
Updated: May 28, 2020
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.
Wages paid to furloughed employees are included in payroll costs
Bonus and hazard wages are included in payroll costs
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
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
Schedule C filers are capped based on their 2019 net profit (8/52)
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
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)
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).