PPP Loan Forgiveness
You have spent all of your PPP loan monies and now you want to apply for forgiveness to complete the process. You may want to consider delaying the submission of your forgiveness application for a few reasons:
- We are expecting additional legislation related to the forgiveness of the PPP loans in the next congressional bill that should simplify the forgiveness process. We don’t want you to be excluded from a simplified process simply because you applied too soon.
- You may have heard that any PPP loan monies that are forgiven will not be considered taxable income. This is true, but the expenses that are used to qualify for the PPP loan forgiveness are NOT allowed as a deduction on your tax return. This effectively makes any PPP loan monies that are forgiven taxable in the year of forgiveness. There is some talk that Congress may address this issue in the future, so we don’t want to jump the gun.
- You are required to apply for forgiveness within 10 months of the completion of the “Covered Period” (you have the option of 8 or 24 weeks). The bank then has 60 days to review your forgiveness application and any supporting documentation and then submit it to the SBA who has another 90 days to review before granting forgiveness. So you have plenty of time to submit your application.
Due to the factors listed above, there will be a lot of PPP loans that are not forgiven until 2021. There were more than 4 million businesses that received a PPP loan and the forgiveness portals are now starting to open. We anticipate that anyone who applies for forgiveness now will be subject to a substantial amount of scrutiny from their bank and then again by the SBA. So our recommendation would be to let the dust settle and then apply after the banks and SBA have worked out the bugs.
For those who have engaged us to help in preparing the PPP Loan Forgiveness application, we will work with you based on your timeline.
In the meantime, please provide us with a copy of your PPP note, which will include the SBA PPP Loan Number, Loan Amount, Lender PPP Loan Number and PPP Loan disbursement date. We will also need to know the amount of any EIDL Advance that was received and the EIDL Application Number, if you have it.
We will keep you informed of any updates that may arise concerning the PPP Loan Forgiveness process.