By: Scott Borsack
The SBA has released its first version of the application for loan forgiveness. You can download a copy of the application from our website by clicking here. The instructions for the application have provided some additional information on the forgiveness process and interpretation of expenses eligible for forgiveness. This is just the first in what will be many clarifications that will come in the form of additional guidance.
The new information consists of the following:
- Lease expenses include payments for real estate as well as for personal property. Equipment leases as well as car and truck lease payments appear to be eligible for forgiveness if made during the covered period on agreements in place before February 15, 2020.
- Full-time equivalents work 40 hours a week, not 30 hours as previously assumed. We can take the total hours, divide by 40 and round to the nearest tenth to determine FTEs.
- Previous guidance suggested that owner-employees, a self-employed individual or general partners were limited in compensation eligible for forgiveness to 8/52 of their 2019 Schedule C (Form 1040) net income from business activities. The application for forgiveness caps the compensation at $15,385. It is possible that the SBA still means 8/52 but no more than $15,385.
- Employees who voluntarily resigned, were fired for cause, or voluntarily had their hours reduced are not counted for purposes of determining FTEs.
Stay tuned. More to follow.
To download the application please click here.
Please note that the content of this blog is provided for information and education only. Nothing stated herein is intended to create an attorney client relationship or to constitute legal advice.
Scott Borsack is a partner with Szaferman Lakind and chair of the Business Department. To contact Scott please email him at sborsack@szaferman.com or call 609.275.0400.
