Many banks are now up and running to accept PPP forgiveness applications. Also, a new, shorter forgiveness application form was recently released for businesses that received $50,000 and under in PPP money.

Borrower’s loan originated on 5/1/20 – borrower has until either 4/30/22 or 4/30/25 to submit a loan forgiveness application. If they use the 8-week covered period, they must start making payments on the loan if they have not submitted the forgiveness application by 4/26/21.

Same facts as above except borrower uses 24-week covered period. The borrower must start making payments on the loan if they have not submitted the forgiveness application by 8/16/21.

We want to help you start preparing your forgiveness applications. That said, we are suggesting getting them ready to submit, but not actually submitting them (turning them in) yet. The reason for this is originally it was thought that the PPP loan would not be income to the borrower when forgiven. Then guidance came out from the IRS that the expenses used for the forgiveness would not be deductible (thus taxable). The head of the American Institute of CPAs stated this week that they still think this will get fixed (after the election) and that these deductions can still be claimed (thus saving you tax on it). It was suggested that we get the applications ready to submit, but not actually submit them until it is clear whether this happens or not, as we would hate to file it early and create a potential taxable issue.

There are also some things that come into play for clients that may have decreased their workforce during their covered period – where it could be resolved by 12/31/20. So, we will plan on working on each of your applications between now and 12/31, so we can advise you, but we will not plan on submitting them until the tax situation mentioned above is resolved. 

--The Team at Rader & Rader