PPP Loan Forgiveness provisions

Good morning. I am reaching out to all my advisors and trying to get clarification on prepaid rent and utilities under the PPP Loan forgiveness provision. What is specifically addressed is that you cannot pay or prepay Mortgage principal but it does not specify if you can prepay rent and/or utilities from what I can find. We of course need to maximize that 25% number as much as possible so if you get clarification on this let me know. Thanks

I want to add on a question if solar is considered part of utilities? I can’t find the answer to this anywhere on gov. site.

3 questions:

  1. I know the PPP covers payroll but I’m unclear on what payroll tax it cover and doesn’t cover. I read and heard in a webinar that it only covers payroll tax for state and local taxes. It doesn’t identify federal tax, not that I can find. So, is the 940 (full amount) forgiven or only part of it (state and local)?
  2. Are we supposed to use up to 25% towards the mortgage interest and utilities? We don’t have to pay for those with it do we? It’s optional, right?
  3. Health/Dental/Vision benefits. - Are these benefits 100% forgiven if I pay this bill through the PPP for June and July?

Soooo many rules and specifications…

April Abbott
The Pediatric Center

  1. It covers gross wages and the employer portion of non-federal taxes.

Wanda works 80 hours at $10/hr. She grosses $800 a month. Her pay is reduced by $100 for federal withholding and employee FICA. Her pay is further reduced by $50 for her share of health insurance and $25 for her retirement contribution. Wanda's take home pay is $625 a month.

You count the whole $800 you pay Wanda. Ignore all the deductions from gross pay on Wanda’s side. You can also count state and local employer-side taxes, like state unemployment, that come out of your pocket, not Wanda’s. If you count anything that’s subtracted from Wanda’s side, you’re double dipping, because you already got credit for her full $800 gross.

  1. Yes, it’s “up to” 25% for rent/mortgage/utilities. 0% also counts, but obviously you’d only do this if you have way more PPP dollars than you can otherwise spend.

  2. Only if they’re employer contributions. In the above example, let’s say Wanda’s health insurance is $450 a month. Wanda contributes $50 (deducted from her paycheck) and you, the employer, pay $400/month. You can only count $400, not $450. The $50 from Wanda’s side was already counted in the $800 wages you got credit for in question #1. Ditto for retirement contributions. Voluntary withholding from employee salary isn’t something you can count as a PPP expense, but any employer matching of employee contributions is.