We start the month of October with more news on Payroll Protection Program (PPP) loan forgiveness. According to The Wall Street Journal, the Treasury Department expects to begin approving and paying out the forgiveness requests of PPP applicants as soon as this week. The Small Business Administration (SBA) has received more than 96,000 PPP loan forgiveness applications since its online portal opened August 10 but has approved none.

Some banks claim that the loan forgiveness application process is too complicated, causing them to wait to see if more guidance is issued by the federal government. Banks are also waiting to see if Congress will pass legislation providing automatic forgiveness for loans of $150,000 or less.

Loan recipients want Congress to reverse an IRS ruling that has serious tax implications for borrowers. In a notice this spring, the IRS said it had ruled out tax deductions for wages and rent paid with forgivable PPP loans in order to prevent a “double tax benefit.”  

According to the U.S. Chamber of Commerce, a forgiven PPP loan is tax-exempt but using the loan can also reduce how much a comopany can write off on its business taxes. Usually, expenses like payroll, rent, and utilities are deductible from normal taxable income, but without the deduction, a business may owe more taxes than it normally pays, the Chamber said.

There are still many unanswered questions. Here are several articles on how COVID-19 is impacting businesses:

(ABC News): 1 in 4 women considering leaving workforce or downshifting careers because of COVID-19, report warns. The coronavirus pandemic has the potential to undo years of gains for women in the workplace, according to a massive new study on the state of women in corporate America from LeanIn.org and consulting firm McKinsey & Company. Learn more.

(CFO): What’s the Right Way to Return to the Workplace? During the COVID-19 crisis, it’s tempting to focus on immediate challenges and sort everything else out later. However, we are also living during a historic global transformative event with fallout that will affect many aspects of business and everyday life in unpredictable ways for years to come. Discover why.

(Construction Dive):  PPP forgiveness approvals could begin this week, SBA says. Contractors frustrated by the long wait for Paycheck Protection Program (PPP) forgiveness guidance may soon get their questions answered. The Treasury Department expects to begin approving and paying out the forgiveness requests of PPP applicants as soon as this week. Read more.

(Financial Management): Advice to boost revenue streams or find new ones. Most CFOs are looking to boost their revenue strategies to remain competitive amidst the continuing challenges of the COVID-19 pandemic. Only some will succeed. Discover why.

(Journal of Accountancy): Companies use full array of tools to navigate the pandemic. The coronavirus pandemic tested the financial mettle of public companies, forcing even healthy ones to manage cash amid slumping sales, social-distancing expenditures, and disrupted supply chains. Financial officers deployed their full array of tools to navigate the crisis, conserving cash for survival, expanding credit lines as a precaution and, in some cases, building an arsenal for hunting bargains amid the downturn. Learn more.

(Philadelphia Business Journal): Exclusive reader survey: Businesses report revenue declines, diminishing cash reserves. Nearly seven in 10 businesses have seen their revenue decline since the start of the COVID-19 pandemic, and many companies say their cash reserves are likely to run dry by the spring, according to an exclusive survey conducted by The Business Journals. Of those experiencing a drop in revenue, close to half said revenue fell at least 50% year-over-year. Read more.

(ABC News): Gov. Phil Murphy signs revised 2021 New Jersey budget, millionaires tax. New Jersey Gov. Phil Murphy signed a $32.7 billion budget, hiking taxes on millionaires and businesses. The budget also provides taxpayer rebates of up to $500. Read more.

Associated Press: 31.4% spring slide for a US economy likely to shrink in 2020. The U.S. economy plunged at an unprecedented rate this spring and even with a record rebound expected in the just-ended third quarter, the U.S. economy will likely shrink this year, the first time that has happened since the Great Recession. The gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter, only slightly changed from the 31.7% drop estimated one month ago, the Commerce Department reported. Learn more.

(Entrepreneur): 3 Reasons Investing in Employee Resilience Pays Off. Resilience is more than a "nice to have." Companies that foster a resilient workforce enjoy better financial performance, more productivity, and happier employees, according to new research from the behavioral scientists at BetterUp. The study, “Resilience in an Age of Uncertainty,” looked at tens of thousands of professionals, both before and during the pandemic, to uncover the impact of resilience on organizations throughout this time. Read more.

(New Jersey Business & Industry Association): The Conference Board Consumer Confidence Index Increased in September. The Conference Board Consumer Confidence Index® increased in September after declining in August. The Index now stands at 101.8 (1985=100), up from 86.3 in August. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 85.8 to 98.5. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – increased from 86.6 in August to 104.0 this month. Learn more.

(NJ Department of Taxation): FAQ Are Issued to Explain the Pass-Through Business Alternative Income Tax Act. P.L.2019, c.320 enacted the Pass-Through Business Alternative Income Tax Act, effective for tax years beginning on or after January 1, 2020. For New Jersey purposes, income and losses of a pass-through entity are passed through to its owners. However, the law allows pass-through entities to elect to pay tax due on the owner’s share of distributive proceeds. The owner(s) may then claim a refundable tax credit for the amount of tax paid by the pass-through entity on their share of distributive proceeds. Learn more.

(Philadelphia Business Journal): Five regional banks team up for micro business loan recovery program. Five fierce local banking rivals have laid down their swords to partner on a loan program to help small businesses navigate unprecedented challenges brought by COVID-19.

Univest Bank, Bryn Mawr Trust Co., Customers Bank, OceanFirst Bank and WSFS Bank have committed $650,000 to fund the Micro-Loan Recovery Program. Learn more.

We will continue to keep you updated. Please visit our COVID-19 Resource Page for more alerts.

Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at Richard.Higgins@MCC-CPAs.com. I can be reached at Marty.McCarthy@MCC-CPAs.com. As always, we are happy to help.