Q: Are payments made on recently renewed leases or interest payments on refinanced mortgage loans eligible for loan forgiveness if the original lease or mortgage existed prior to February 15, 2020?
A: Yes. If a lease that existed prior to February 15, 2020 expires on or after February 15, 2020 and is renewed, the lease payments made pursuant to the renewed lease during the Covered Period are eligible for loan forgiveness. Similarly, if a mortgage loan on real or personal property that existed prior to February 15, 2020 is refinanced on or after February 15, 2020, the interest payments on the refinanced mortgage loan during the Covered Period are eligible for loan forgiveness.
Example: A borrower entered into a five-year lease for its retail space in March 2015. The lease was renewed in March 2020. For purposes of determining forgiveness of the borrower’s PPP loan, the March 2020 renewed lease is deemed to be an extension of the original lease, which was in force before February 15, 2020. As a result, the lease payments made under the renewed lease during the Covered Period are eligible for loan forgiveness.
This Q&A was based on information contained in the Treasury Department’s October 13, 2020, version of “Paycheck Protection Program Loans, Frequently Asked Questions on PPP Loan Forgiveness,” which may be updated from time to time. This CARES Act / SBA / PPP Loan Forgiveness-related issuance may be found here: https://home.treasury.gov/system/files/136/PPP--Loan-Forgiveness-FAQs.pdf