What nonpayroll costs are eligible for PPP forgiveness?

Eligible nonpayroll costs cannot exceed 40% of the total forgiveness amount. An eligible nonpayroll cost must be either paid during the 8- or 24-week covered period or incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period. Business owners should count nonpayroll costs that were both paid and incurred only once.

According to the Small Business Administration, eligible nonpayroll costs consist of:

  • Covered mortgage obligations: Payments of mortgage interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020
  • Covered rent obligations: Business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020
  • Covered utility payments: Business payments for a service for the distribution of electricity, gas, water, telephone, transportation, or internet access for which service began before February 15, 2020
  • Covered operations expenditures: Payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting of tracking of supplies, inventory, records, and expenses
  • Covered property damage costs: Costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation
  • Covered supplier costs: Expenditures made to a supplier of goods for the supply of goods that are essential to the operations of the borrower at the time at which the expenditure is made, and made pursuant to a contract, order, or purchase order in effect prior to the beginning of the covered period (for perishable goods, the contract, order, or purchase order may have been in effect before or at any time during the covered period)
  • Covered worker protection expenditures: Operating or capital expenditures that facilitate the adaptation of the business activities of an entity to comply with the requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a state or local government, during the period starting March 1, 2020 and ending on the date on which the national emergency declared by the President with respect to the Coronavirus Disease 2019 (COVID-19) expires related to maintenance standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19, but does not include residential real property or intangible property.