July 23, 2020
What does it mean if an expense is allowed but not forgiven? Isn’t that the same thing or does “not allowed” indicate a future penalty or something?
Posted by Armanino Financial Advisory Team
Interest payments on non-mortgage debt obligations are “allowed” by Section 1102, paragraph 36(F)(i)(VII) of the CARES Act, which is part of the section that originated the PPP program. However, those payments are not included in the list of “forgivable” expenses by Section 1106, which details the forgiveness aspect of the law. Therefore, they are “allowable” but not “forgivable”. The fact that these particular costs may not be included in forgiveness does not suggest there will be future penalties associated with spending PPP funds on them; it just means you will need to pay the money back as part of the loan repayments.