The team at MBC is here to help small businesses understand the Paycheck Protection Program (PPP). CPA and Professional Staff Manager, Matthew Vandelicht, answers the top three questions our clients have about this program.
1. When can a borrower apply for loan forgiveness?
According to SBA interim rules, a borrower can apply anytime for loan forgiveness any time between their 8- and 24-week period.
“A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan—including before the end of the covered period—if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness.”
Keep in mind, if you have employees that have reduced their wages by 25 percent or you have not hired your full workforce back, special rules are going to apply.
We recommend that you have all your documentation in order before you present to the SBA and to your bank. We’re happy to answer any questions you might have and understand this is a changing situation and will update as needed.
2. I am a sole proprietor, will I get 100% of my loan forgiven?
Yes. There is a new EZ form that the SBA has come out with to allow self-employed individuals to receive 100 percent of their loan forgiven without having to provide a lot of documentation up-front. Self-employed individuals will need to keep that documentation on file for future reference. Please note, if you have employees, different rules may apply.
3. Can my PPP expenses be forgiven and deducted on my 2020 tax return?
No. The IRS stated earlier this year, no tax deduction will be allowed for expenses paid with PPP loan proceeds because it is a forgivable debt and not taxable. Please contact us to discuss how this will impact your tax planning for 2020.
We're here to help!
Call us to discuss any questions you have about Paycheck Protection Program loans or any other tax concern you have.