We wanted to give everyone an update on the PPP Loan Forgiveness Application process.
Many of you have been asking us about the status of getting your PPP loans forgiven. We are still waiting for some additional guidance relative to the taxability of the loan forgiveness. Although Congress has made clear that the PPP loan amounts forgiven are NOT income, IRS has said that business expenses paid by forgiven amounts may not be deducted, effectively making it taxable income. It’s unclear what tax year this would affect and whether any new Congressional action would be retroactive.
As a reminder, the application for forgiveness must be done within 10 months of the end of the covered period, which for most of you is now based on a 24 week period, meaning that we have until next June or July to apply for forgiveness. After the forgiveness application
, the bank has 60 days and the SBA has 90 days to review and approve it, so even if you apply for forgiveness today
, we don’t believe that many will be approved until well into 2021.
The SBA has substantially streamlined the forgiveness process for PPP loans
of less than $50,000, so we will begin the process of preparing these applications, and providing them to you. Depending on your tax situation, you may wish to submit the application so the application isn’t considered until 2021 to defer having to pay taxes on the income until then.
As always, you can reach out to Paul, Karen or me if you have any questions.