PPP Forgiveness-Owner Salary Limits

05/26/2020 12:08PM

Let’s start with the same broken record disclaimer that we’ve now said no less than 100 various times…we still have not received guidance on the PPP forgiveness provisions.  Still.  Even though it was due to us in late April.  Even though many of you are well into your 8-week period.  Are we frustrated?  Yeah, we’re frustrated!  So anything we advise at this time is still subject to change. However, here is some information regarding PPP Forgiveness-Owner Salary Limits.

SBA released the PPP forgiveness application recently, and it revealed a change.  Not a good change, but one that needs to be highlighted.  As an owner/employee of your practice, the limit on wages that can be forgiven under PPP provision per the CARES Act is $15,385 over the 8 weeks.  You know this well by now.  BUT, now it is limited even further IF you paid yourself less than $100K in 2019.  According to the newly released forgiveness instructions, forgivable owner wages are capped at the $15,385 amount, OR the 8-week equivalent of compensation in 2019, whichever is lower.  In plain English, if you took a salary in 2019 less than $100K, you can’t increase your salary now not to help increase PPP forgiveness.  

For instance, if you made $75K in 2019, your salary over the 8-week PPP period is limited to $11,538.  Not $15,385.  If you did not take your required wages in 2019, you are limited to $0.  In those cases, if you paid, or will pay yourself the $15,385 previous maximum, it will not all be forgiven.  SBA could revise this position in future guidance, but there is no expectation it will do so.