PPP funds can cover more than just payroll, but it's not always clear on what that means. We take a closer look at eligible rent expenses for the PPP.
The Treasury also notes that self-employed individuals claiming a rent expense need to have been eligible to claim a deduction for such expense on their 2019 Form 1040 Schedule C.
In our interpretation of the official Treasury guidance, we consider rent expenses to be any amount that is paid in a periodic manner, in order to use property for business purposes. These expenses must be a result of a signed agreement from before February 15, 2020.
This is a fairly broad interpretation that will allow expenses other than a building lease payment to qualify as eligible rent expenses.
The Treasury's official guidance has two examples of acceptable rent expense:
Based on this interpretation, we believe the following examples would also qualify:
The following items wouldn't be eligible for PPP rent expense:
Remember, the PPP is intended to protect paychecks. At least 60% of your forgiven amount must be attributed to payroll or owner compensation replacement. If you spend your entire loan on rent, you won't qualify for any forgiveness.
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