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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Rules and Regulations i the purchase, maintenance, or renovation of assets that create or expand I a drive-through window facility;
II an indoor, outdoor, or combined air or air pressure ventilation or filtration system;
III a physical barrier such as a sneeze guard;
IV an expansion of additional indoor, outdoor, or combined business space;
V an onsite or offsite health screening capability; or VI other assets relating to the compliance with the requirements or guidance described in subsection A, as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; and ii the purchase of I covered materials described in 328.103a of title 44, Code of Federal Regulations, or any successor regulation;
II particulate filtering facepiece respirators approved by the National Institute for Occupational Safety and Health, including those approved only for emergency use authorization; or III other kinds of personal protective equipment, as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; and C does not include residential real property or intangible property.14
This interim final rule uses the term nonpayroll costs to refer to the payments described in 28 above.
Eligible nonpayroll costs cannot exceed 40 percent of the loan forgiveness amount.15 A borrower may receive forgiveness for the nonpayroll costs described in 5, 6, 7 and 8 only if SBA had not yet remitted a forgiveness payment on the borrowers loan to the borrowers PPP lender as of December 27, 2020 the date of the Economic Aid Acts enactment.
b. For borrowers that are individuals with self-employment income who file a Form 1040, Schedule C or F, what amounts are eligible for forgiveness? 16

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The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount spent 14 This eligible nonpayroll cost was added by section 304 of the Economic Aid Act.
15 See section 7Ad8 of the Small Business Act.
16 This subsection was originally published at 85
FR 21747, subsection III.1.f. Apr. 20, 2020 and has been modified to conform to subsequent rules or guidance and sections 306, 313, and 344 of the Economic Aid Act.

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during the covered period as described in section IV.3 below 17 on:
i. Payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee, as prorated for the period during which the payments are made or the obligation to make the payments is incurred maximum per individual is $100,000
prorated for the covered period, e.g., for an 8-week covered period a maximum of $15,385 and for a 24-week covered period a maximum of $46,154,18 as well as covered benefits for employees but not owners, including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer such as unemployment insurance premiums, but excluding any qualified wages taken into account in determining the Employer Retention Credit;
ii. owner compensation replacement, calculated based on 2019 or 2020 19 net profit 20 as described in subsection 3.c.
below; forgiveness of such amounts is limited to either a the prorated portion of 2019 or 2020 net profit for a covered period up to 2.5 months, or b 2.5
months worth 2.5/12 of 2019 or 2020
net profit up to $20,833 for a covered period greater than 2.5 months,21
excluding any qualified sick leave equivalent amount for which a credit is claimed under section 7002 of the Families First Coronavirus Response Act FFCRA Pub. L. 116127 or qualified family leave equivalent amount for which a credit is claimed under section 7004 of FFCRA;
iii. payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C or F business mortgage payments;
iv. rent payments on lease agreements in force before February 15, 2020, to the extent they are deductible on Form 1040
17 The Economic Aid Act amended the definition of the forgiveness covered period.
18 Due to the amended definition of forgiveness covered period in the Economic Aid Act, this calculated amount has changed.
19 For First Draw PPP loans made in 2020, borrowers use 2019. For First Draw PPP loans made in 2021 and Second Draw PPP Loans, borrowers use the year 2019 or 2020 that was used to calculate the borrowers loan amount.
20 For self-employed borrowers that file Form 1040, Schedule F and have no employees, gross income may be used instead of net profit throughout this calculation. For self-employed borrowers that file Schedule F and have employees, the difference between gross income and employee payroll costs may be used instead of net profit throughout this calculation. See section 313 of the Economic Aid Act.
21 Section 306 of the Economic Aid Act allows the borrower to select a covered period between 8
weeks and 24 weeks.

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Schedule C or F business rent payments;
v. utility payments under service agreements dated before February 15, 2020 to the extent they are deductible on Form 1040 Schedule C or F business utility payments;
vi. any covered operations expenditures to the extent they are deductible on Form 1040 Schedule C or F; 22
vii. any covered property damage costs to the extent they are deductible on Form 1040 Schedule C or F; 23
viii. Any covered supplier costs to the extent they are deductible on Form 1040
Schedule C or F; 24 and ix. any covered worker protection expenditures to the extent they are deductible on Form 1040 Schedule C or F.25
A borrower may receive forgiveness for the new nonpayroll costs described in vi., vii., viii., and ix. only if SBA had not yet remitted a forgiveness payment on the borrowers loan to the borrowers PPP lender as of December 27, 2020.
2. Loan Forgiveness Process a. What is the general process to obtain loan forgiveness? 26
To receive loan forgiveness on either a First Draw PPP Loan or a Second Draw PPP Loan, a borrower must complete and submit the Loan Forgiveness Application 27 to its lender or to the lender servicing its loan. For Second Draw PPP Loans in excess of $150,000, the borrower must submit its loan forgiveness application for the First Draw PPP Loan before or simultaneously with the loan forgiveness application for the Second Draw PPP Loan, even if the calculated amount of forgiveness on the First Draw PPP Loan is zero.28
22 This eligible nonpayroll cost was added by section 304 of the Economic Aid Act.
23 This eligible nonpayroll cost was added by section 304 of the Economic Aid Act.
24 This eligible nonpayroll cost was added by section 304 of the Economic Aid Act.
25 This eligible nonpayroll cost was added by section 304 of the Economic Aid Act.
26 This subsection was originally published at 85
FR 33004, section III.2. June 1, 2020 and was amended by 85 FR 38304, subsection III.2.a. June 26, 2020 and 85 FR 66214, subsections III.2.a. and b. Oct. 19, 2020 and has been modified to conform to section 307 of the Economic Aid Act.
27 SBA Form 3508, 3508EZ, 3508S, as applicable, or lender equivalent. Loan Forgiveness Application forms were amended to conform to the Economic Aid Act, including section 307, which requires a simplified forgiveness application for loans of not more than $150,000. The Simplified Forgiveness Application is SBA Form 3508S as amended.
28 This requirement is necessary to provide information relevant to the borrowers eligibility for the Second Draw PPP Loan and loan forgiveness.
A borrower is eligible for a Second Draw PPP Loan
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