Is it time?

We will keep you informed on the page of the latest information about applying for PPP Forgiveness.  Reference this page as it will be updated as the SBA and the IRS release information.

Is it time to apply for PPP Forgiveness?

Maybe

Why not full speed GO?

We have not received clarifying guidance from the IRS and it doesn’t appear they are going to provide it anytime soon.  Therefore, you may proceed with caution to apply for forgiveness.  PLEASE make sure you only use 60% of the loan amount for payroll costs (unless we have instructed otherwise).  Using more than this could result in reduced credit available if you qualify for the ERC.

There are many areas of confusion surrounding the PPP forgiveness process and how the PPP funds interact with the ERC (Employee Retention Credit).  The main areas that remain unanswered deal with:

1. Treatment of family members and 100% owners of businesses
2. The forgiveness of the PPP loan is not taxable.  The ERC is not includible in gross income, but it is subject to expense disallowance rules, which effectively makes it taxable.
3. It is unclear if the ERC wages overlap with PPP is just the part that qualifies for the credit or the full wage before credit (so $10,000 or $5,000 for 2020).
4. It is unclear whether forgiven PPP loan amounts are counted toward the gross receipts test in 2021, which can make or break whether a company’s paid wages qualify for the credit.
5. IRS guidance has also been ambiguous about how the employee retention credit can be used concurrently with other credits, such as the tip credit,

If these items affect you, you should proceed with caution.

When is the loan due?

The loan had a 24-week covered period and then the forgiveness is due 10 months after that.  It is unclear if banks will require you to make payments if you have submitted the forgiveness application but it has not been approved by the SBA at the time of the due date.

Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if the borrower does not apply for loan forgiveness within 10 months after the last day of the maximum covered period of 24 weeks, or if the SBA determines that the loan is not eligible for forgiveness (in whole or in part), the payments on the PPP loan are no longer deferred and the borrower must begin paying principal and interest.

Why does my bank keep telling me I have to apply now?

Banks have loan reserve guidelines they must follow for the Federal Reserve and regulatory processes.  They want to be able to loan money and want to “clean up” to get these loans off their books.  They have no incentive to wait and do not care about guidelines from the SBA or IRS.  These are the bank’s issues to worry about, not yours.