Update: November 18, 2020
We are still waiting to see if there will be additional legislation with the current administration so there isn’t a lot new with the Payroll Protection Program (PPP) situation. Many companies are anxious to put the PPP loans in the rear view mirror.
Here are some of the things that you should be considering before year end…
- While there is bipartisan support to ensure that the PPP loans don’t create a taxable event, current IRS rules make the expenses paid with the PPP loan nondeductible and thus creating additional taxable income. So, discuss with your Tax Advisor the best option for you related to applying for forgiveness.
- For those with loans less than $50k the SBA has come out with a simple form for forgiveness – Form 3508S. This simplifies the application process, but please discuss with your Tax Advisor prior to submitting to your bank.
- For those with loans greater than $2 million the SBA has come out with a loan necessity questionnaire that your bank should be sending you to complete. This has not been publicly released so we are not exactly sure what all is entailed with the form or when you might receive from your bank.
- For the use of proceeds for eligible expenses – you can use both incurred and paid expenses for payroll, rent, and utilities.
- Make sure that your bank is deferring your loan payments. With the PPP Flexibility Act (signed June 5th) banks are required to defer your loan until you have a determination from the SBA. You have up to 10 months after your 24-week period ends to apply for forgiveness.