Most of you have PPP loans and are now approaching the time to actually apply for the forgiveness to get this thing behind you and done.
We are recommending to our clients that you wait for a whole slew of reasons.
- We are expecting more legislation to come in this area, expecting something to be included in the next congressional bill that should simplify the forgiveness process. We don’t want you excluded from this process simply because you had applied sooner.
- You may have heard that the forgiveness of these loans is not taxable income, which is true, but with a huge but. The expenses that the PPP loan are used to pay are NOT deductible on your tax return. Therefore, for all intents and purposes, the PPP loans will be income and taxed to you in the year you receive forgiveness. We understand Congress may address this issue as well, so we don’t want to jump the gun.
- To get forgiveness, you must apply within 10 months of the completion of the ‘COVERED PERIOD’ (8 weeks for some, 24 weeks for others). You have plenty of time, and as we understand it, the bank has 60 days to review the application and documents, and then they hand it over to the SBA who has another 90 days to review it before issuing forgiveness.
Because of this, there is a good likelihood that no one will get their PPP loan forgiven in 2020.
- Lastly, the forgiveness portals are just opening now. We anticipate that anyone who applies for forgiveness now will be subjected to a substantial amount of due diligence from their bank and then again by the SBA i.e., the equivalent of being ‘audited’.
There are at least 4 million small businesses who have gotten these PPP loans. We are recommending that you apply for forgiveness when everyone starts applying to bring less scrutiny to your forgiveness application.
- We are in the early stages of preparing PPP loan forgiveness applications for those of you who have engaged us.
We will be completing the SBA forms used for forgiveness, working with you for getting and assembling any needed documentation, and will work with you so you can provide these forms directly to your bank or help you enter the information on a bank provided online portal.