Postponement of the PPP Loan Forgiveness Application
We continue to provide updates to our clients regarding the PPP loan forgiveness application process. We recommend that all PPP loan borrowers continue to wait for further loan program updates from Congress and the SBA before submitting your loan forgiveness application to your bank. As of right now, each PPP loan borrower can utilize a 24-week covered period for payroll costs and other covered expenses. Once the 24-week period is over, the PPP loan borrower has a 10-month loan payment deferment period before the first payment is due and the loan forgiveness application can be submitted anytime during this 10-month period.
The potential changes to the loan forgiveness process include a blanket automatic forgiveness for loans less than $150,000 and possible changes to the taxability of the loan forgiveness to the business. As of right now, if the PPP loan is forgiven by the SBA, the expenses used to obtain the loan forgiveness are not tax deductible to the business, meaning a higher taxable income. This needs to be considered prior to submitting your loan forgiveness application and we urge you to reach out for tax planning if you decide to seek loan forgiveness before year-end.
Most Recent Guidance from the SBA
On October 7th, the SBA released the PPP Loan Forgiveness Application Form 3508S, for business owner’s who’s PPP Loan is less than $50,000. If your bank reaches out for you to complete this application, please contact our office for guidance. We recommend postponing your forgiveness application even if under the $50,000 loan amount.
Details - SBA Form 3508S requires fewer calculations and less documentation for eligible borrowers. Borrowers that use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, SBA may request information and documents to review those calculations as part of its loan review process.
Please contact our office if you have any questions regarding the PPP loan forgiveness applications or process.
CPA Partners, LLC