That is our understanding at the moment. We keep hearing though that SBA and IRS will provide further guidance before the 8 weeks is up. There are 3 tests to qualify for discharge:
Spend the money on qualified expenses within the 8 week period starting when the money was deposited into your account
Rehire same number of employees
Pay employees as much as before the crisis
Qualified expenses are as follows:
Payroll costs which is as follows:
Salary, wages or commissions
Vacation, parental, family, medical or sick leave
Group health benefits – employer paid portion only
Retirement plan contributions – employer paid portion only
State of local tax assessed (unemployment)
Interest paid on any indebtedness incurred in the ordinary course of business before 2/15/2020. Interest needs to be current expenses only – you may not prepay interest and have it discharged. We believe that this would include interest on equipment purchases or business vehicles also but more guidance will be forthcoming.
Rent is rent obligated under a leasing agreement in force before 2/15/2020. This would be real property rent as well as copier or equipment leases, business vehicle leases as well as rent for an office in home. Rent may be prepaid unlike mortgage interest
Utilities means electricity, gas, water, transportation, telephone or internet access.
75% of the loan must be used for payroll. Obviously this is all new and the seminars we’ve taken have advised that the above rules are what is known now – subject to change or further clarifications.