The Small Business Administration (SBA) opened the forgiveness portal for its Paycheck Protection Program (PPP) loans this past week, however we are recommending that recipients of the PPP loans don’t rush to get the application filed. We are making this recommendation because the SBA is continuing to issue guidance in the form of frequently asked questions, with the most recent updates issued on August 11, 2020. We are expecting to see additional changes in the coming weeks and months as lawmakers continue to debate the next COVID-19 relief bill. Some of the changes being debated are simplifying the forgiveness application with the possibility of self-certification under $150k as well as potentially making the expenses covered by the PPP loan funds deductible for tax purposes. The IRS has previously stated that the loan forgiveness will be tax-free, however businesses are not currently able to deduct the covered expenses.
As difficult as it may be to wait, the safest move for now is to see how lawmakers proceed before taking a chance on applying for forgiveness. In the meantime, we recommend gathering the supporting documentation on covered expenses and calculating when full forgiveness will be achieved. This will ensure that you are ready when the timing is right. It is important to note that loan forgiveness applications are due 10 months after the covered period has ended.
Please reach out to us if you have any questions or would like us to assist you in gathering the supporting documentation and calculating loan forgiveness.