As we await the passage of the next round of COVID-19 stimulus legislation, there is news about the Paycheck Protection Program (PPP).
On July 23, the Small Business Administration (SBA) issued a procedural notice for PPP lenders. In the notice, the SBA stated that it would begin accepting PPP forgiveness applications from lenders once a new software platform under development is launched – currently slated for August 10.
Many PPP borrowers are understandably anxious to learn more details about the loan forgiveness process, including when they can apply. However, we continue to advise borrowers that there is no rush to apply for forgiveness, and in fact, there are advantages to waiting.
First, the SBA continues to make changes to the PPP program and there are still numerous unanswered questions. Also, we expect more changes to the loan forgiveness application, as the SBA has not yet updated the current version to reflect the recent extension of the PPP application deadline to August 8.
Plus, the negotiations currently underway in Washington regarding the next round of COVID-19 related legislation are likely to include additional changes to the PPP program. For instance, the Senate Republicans’ proposal introduced yesterday includes another round of PPP loans for those businesses that have been hardest-hit and would cap a company’s total PPP loan amount at $10 million. It would also streamline forgiveness for loans under $1 million and expand to cover certain supplier costs and operating expenses.
Additionally, uncertainty remains regarding the tax treatment of the expenses associated with PPP loan forgiveness. As previously announced by the IRS, expenses paid with forgiven PPP loan proceeds will not be deductible. While the timing of these disallowed expenses is still unclear, there may be an opportunity to defer the lost deduction by delaying the submission of the PPP loan forgiveness application.
It is also important to keep in mind that you have 10 months after the end of a PPP loan’s covered period to file for forgiveness. So it makes sense to wait for the legislative dust to settle, be on the lookout for further guidance from the SBA and IRS, and take your time with your loan forgiveness application.
In the meantime, it may be a good idea to learn as much as you can about the loan forgiveness application process and the forms you will be required to fill out.
We recently conducted a webinar that walked through the PPP loan forgiveness application. You can watch the rebroadcast of the webinar on our website here.
As always, we are here to help and are happy to assist you with the PPP loan process. If you have any questions about these or any other matters, please contact your Kreischer Miller relationship professional or any member of our team. We also continue to update our COVID-19 Resource Center, which you can access here.
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