Paying Employee Bonuses Using PPP

05/27/2020 2:47PM

There are still plenty of questions to be answered regarding PPP forgiveness details!  BUT recently released regulations have addressed the issue of paying employee bonuses using PPP proceeds.  The Department of Treasury has issued a ruling stating that hazard pay and bonuses are forgivable payroll costs during the PPP Covered Period.  This is a great answer to a question you have been asking.

This ruling is a very broad interpretation of compensation.  But it provides a good strategy to help achieve the 75% payroll costs requirement for full PPP loan forgiveness.  This compensation rule also applies to furloughed employees.  So providing hazard pay, or keeping your employees on payroll even if they didn’t work, will still qualify as a forgivable payroll expense.  The caveat to remember when paying any type of compensation–$15,385 per employee is the maximum forgivable amount during the Covered Period.

Your next question:  Does that mean I can pay my spouse a bonus and include it in forgivable compensation?  Unfortunately, that question remains answered.  We expect the SBA to issue specific guidance concerning related parties…someday.