Use of PPP loans to pay Forest Service permit fees

Your Government counsel.™

Proceeds from loans US Forest Service permittees obtain under the Payroll Protection Program (PPP) can be used to pay rent under a leasing obligation in force before February 15, 2020.  In addition, the Forest Service characterizes most permit fees as “rental fees” under its applicable regulations.  Therefore, it appears PPP loan proceeds can be used to pay most Forest Service permit fees and still qualify for loan forgiveness.

The SBA’s website indicates that up to 25% of any loan received under the PPP can be used to pay rent:

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).

This determination is confirmed in the SBA’s interim final rule (Fed. Reg. 20811 (April 15, 2020)), which states:

The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest.  That is, the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgiveable purposes described below and employee and compensation levels are maintained. The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the eight-week period following the date of the loan. However, not more than 25 percent of the loan forgiveness amount may be attributable to non-payroll costs.

Notably, the Forest Service’s regulations which address fees issued to holders of special use permits refers to such fees as “rental fees.”

Based on the fact that the Forest Service refers to its permit fees as “rental fees,” it appears these loan proceeds can be used by a Forest Service permit holder to pay its permit fees and not preclude its ability to qualify for loan forgiveness under the PPP, provided that all other applicable conditions for loan forgiveness are met.  We recommend that you check with a qualified professional to determine if your payments qualify for loan forgiveness.

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