Rent, utilities, and interest on mortgages are eligible expenses (non-payroll costs) if the agreements existed before 2/15/2020. You can use up to 40% of the loan forgiveness amount to pay these costs during the covered period.
40% of loan forgiveness amount
At least 60% of the loan must be used for payroll costs; the rest can be used for eligible non-payroll costs. This is based on the amount of the loan that is forgiven, not on the original loan amount. So if your payroll costs are less than 60% of your loan, the amount that can be forgiven for non-payroll costs goes down, too.
You'll see this accounted for in the PPP Loan Forgiveness Estimator under Track the progress, Amount 2.
Mortgage Interest
Includes interest payments on mortgages that existed before 2/15/2020. Does not include any prepayment or payment of principal.
Rent
Includes lease agreements that existed before 2/15/2020.
Utilities
Utilities include electricity, gas, water, transportation, telephone, and internet access, as long as service began before 2/15/2020.
Still wondering what counts? You're not alone. Generally, a transportation utility is assumed to be gas (or another fuel) for business vehicles. Some companies plan to include both landlines and cell phones as telephone. However, the Small Business Administration hasn't addressed these questions directly. Ask your CPA, lawyer, or lender for guidance.
What time period is included?
Expenses are eligible for forgiveness if either of the following is true:
- They are paid during the covered period
- They are charged for the covered period and paid by the next regular billing date