SBA Issues Interim Final Rule on Owner Compensation

SBA updates PPP calculations for loan forgiveness

The Small Business Administration (SBA) has issued a new interim final rule for determining payroll costs and owner compensation in calculating Paycheck Protection Program (PPP) loan forgiveness under the new 24-week covered period.

The Paycheck Protection Flexibility Act (PPFA) tripled the period during which PPP recipients could spend the funds and still qualify for loan forgiveness. The PPP allows loan forgiveness for payroll costs for up to $100,000 annualized per employee, or $15,385 per individual over the eight-week period. The new interim final rule establishes the 24-week maximum for full loan forgiveness at $46,154 per individual. The interim final rule does not do the same with owner compensation replacement for businesses that file a Schedule C or Schedule F. Forgiveness for the owner compensation replacement is calculated as:

• (8 ÷ 52) × 2019 net profit, up to a maximum of $15,385 for the eight-week period.
• (2.5 ÷ 12) × 2019 net profit, up to a maximum of $20,833 for the 24-week period.

Get assistance with PPP and other programs

KRS professionals are available and happy to assist with loan and grant applications. Visit the PPP FAQs page or KRS’ Coronavirus Resources Page for additional information. Please contact us if you have any questions, concerns, or need advisement during this unprecedented time.