Over the last week, the SBA has issued a series of new rules interpreting the recent PPP Flexibility Act of 2020. The key feature of a PPP loan is that if the proceeds are spent in accordance with guidelines, the loan will be forgiven, with no repayment required. Revenue Ruling 2020-27 provides guidance on PPP participants who have applied for forgiveness for their loans and have not received an indicator of the amount being forgiven.  The ruling, to summarize, states that if the taxpayer has a reasonable expectation for forgiveness, they cannot deduct the expenses in 2020 that the loan forgiveness covers. This also applies to those that haven’t applied for forgiveness at all yet. The U.S. Small Business Administration (SBA) released guidance Tuesday confirming that Paycheck Protection Program (PPP) loan forgiveness applications are not due on Oct. 31. CLICK HERE. Revenue Procedure 2020-51 provides a safe harbor procedure for PPP loan participants whose loan is partially or fully denied (or those forgoing forgiveness). Safeguards The Good, the Bad and the Ugly of PPP Loan Forgiveness Delays Some banks aren't even ready to process PPP loan forgiveness applications--nearly … If a PPP loan recipient has some or all of the loan forgiven by the end of the 2020 tax year or can reasonably expect forgiveness will occur after 2020, then the qualifying expenses leading to PPP loan forgiveness are not tax deductible, regardless of when forgiveness occurs. Yesterday evening, the Small Business Administration (SBA) dropped another one: it … Not exactly. Not yet, though Treasury Secretary Mnuchin had floated this idea some time ago and it had made its way into several bills that never passed. If you need 24 weeks to use all loan proceeds on qualified expenses AND you do not plan to cut FTE’s, use the 24-week period. PPP Loan Forgiveness Update. The SBA’s FAQS on PPP Loan Forgiveness, as updated on August 11, 2020, are available here. As of June 5, 2020, a new bill was signed into law by the President to expand the PPP loan forgiveness rules. What’s New? New applications were not accepted after August 8, 2020, most earlier loan recipients completed their 8-week covered period over the summer, and the pace of revisions to the program finally slowed down. As a practical matter, borrowers accepting PPP loans should carefully read and understand each certification in the application and the promissory note. PPP Loan Forgiveness Forms There are 3 choices in forms for forgiveness with distinct qualifications to be able to use the different forms. For sole proprietors or independent contractors with no employees, the maximum possible PPP loan is therefore $20,833, and the entire amount is automatically eligible for forgiveness as owner compensation replacement. To receive this “gift,” however, … American Banker tells us Why banks are putting PPP forgiveness on the back burner in THIS ARTICLE published August 10,2020. Check the reports carefully! Any tax planning or estimates will need to take forgiveness amount into consideration. Revenue Ruling 2020-27 provides guidance on PPP participants who have applied for forgiveness for their loans and have not received an indicator of the amount being forgiven. He is skilled in identifying and integrating the full range of financial and non-financial business issues in contract negotiations and resolution of business decisions. Update, November 18, 2020: We have been closely monitoring legislative action and SBA guidance. One of the gateways to using the EZ Forgiveness Application or using FTE Reduction Safe Harbor 1 on the full Application is proving: Showing that sales were reduced from the pre-February 15 level, or as compared to the prior year, can help you justify that your business was negatively impacted, but you must start by defining which government actions impacted your business. Prior to the PPPFA, borrowers with forgiven PPP loans were not eligible for the CARES Act’s payroll tax deferral. Update on the PPP loan forgiveness application . Here are the key takeaways from recent CARES Act PPP provision updates: You have 24 weeks (rather than 8) to spend PPP funds on labor, interest, rents and utilities. Expect them to drag their feet. Doug Jones, Managing Director, provides fractional CFO and senior financial management services to small and midsize organizations. The legislation said that for loans under $50,000, recipients would not have to “submit any documentation or application to receive forgiveness” as long as they certified that they used the funds in compliance with the rules. Several reasons…the main one being their hope that some sort of automatic forgiveness as mentioned above will pass, thus reducing their workload. April 21, 2020. Any company that falls under this category will also be “exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or … This amount will reduce your expenses and can quite possibly increase your taxable income. Why banks are putting PPP forgiveness on the back burner, Proactive Risk Management Planning Guidelines, 5 Steps to Create a Solid Total Reward Mix, Fahrenheit Advisors Taps Executive to Lead Richmond, VA Human Capital Management Practice, “an inability to return to the same level of business activity as the borrower was operating at before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.”. Published June 19, 2020. Last updated: October 28, 2020 - Simpler PPP forgiveness application for loans up to $50,000 available starting mid-November. It has been awhile since we updated our clients and friends about the Payroll Protection Program (PPP). Approximately 85% of PPP loans are $150,000 or less, so banks would welcome the ability to avoid the need to do a detailed review of all of those forgiveness applications. Recently, the Small Business Administration (SBA) released additional guidance to clarify the deferral period for Paycheck Protection Program (PPP) loan payments (FAQ #52) and simplify the loan forgiveness application process for loans of $50,000 or less (IFR). Created with Sketch. As of November 17, 2020, the IRS released a new Ruling and a new Procedure in regards to Paycheck Protection Program (PPP) loans. PPP Loan Forgiveness Update The Small Business Administration and Treasury released new guidance clarifying that business expenses made with PPP funds are not eligible for a tax deduction. Even if you received your PPP loan before the PPP Flex Act was released on June 5, 2020, you still have 10 months after your covered period ends to apply for loan forgiveness. Please be advised that the Bank expects to start accepting applications for PPP loan forgiveness beginning the week of August 31, 2020. Most recently, it came up in the updated version of the HEROES Act passed in the House last week. If you used most of the loan proceeds in 8 weeks AND do plan to have reductions in FTE’s, use the 8-week period. Posted on August 28, 2020. PPP Loan Forgiveness Calculation Form. The IRS has ruled that any forgiven part of a PPP loan is exempt from being taxed as a “discharged debt.” He is a member of Fahrenheit’s Leadership Team. In addition to improving his clients’ accounting and finance operations, Doug frequently serves as the link between company owners and outside advisors including attorneys, CPAs, investment bankers, appraisers, and personal financial advisors. The Paycheck Protection Program Flexibility Act includes changes that should bring a sigh of relief for business owners who continue to struggle to … PPP Loan Forgiveness Calculation Form. An Update on PPP Forgiveness. As a result, there is not a lot of focus on the program by bankers. The Small Business Administration and Treasury Department announced in October 2020 that it would greatly simplify the forgiveness process for any business that received a PPP loan worth less than $50,000. It will also make it easier for many current PPP borrowers – especially with loans of $150,000 or less – to request Forgiveness. Paycheck Protection Program Loan Forgiveness Update. This information is current as of November 18th, 2020. A loan review may occur which would require additional information, but we expect reviews to be rare due to the number of PPP loans. Apparently, based on the parameters laid out by the Treasury Department, Main Street Loans will be appropriate for a very small slice of the borrowing community. by Bill Berry on May 21, 2020. Paycheck Protection Program (PPP) Frequently Asked Questions (FAQs) on Loan Forgiveness August 29, 2020 | Kristine A. Tidgren. This makes sure that the payments escape the $20,833 cap per individual and add to your forgiveness. Inc. describes the Need for the Federal Reserve to step up and help the Main Street Lending Program in THIS ARTICLE published August 28, 2020. Some errors come from incomplete data being input by users and other appear to be programming errors. The Interim Final Rules and the loan forgiveness applications issued by the SBA in response to the PPP Flexibility Act serve to update certain guidance and the original loan forgiveness application to incorporate the terms of the PPP Flexibility Act. If you have watched much of the political conventions over the past two weeks, it seems hard to imagine that a consensus will be reached any time soon. Monday: 8:30 am – 5:00 pm Tuesday: 8:30 am – 5:00 pm Wednesday: 8:30 am – 5:00 pm Thursday: 8:30 am – 5:00 pm Friday: 8:30 am – 5:00 pm Saturday: Closed Sunday: Closed, MMNT Certified Public Accountants 160 Chapel Road Suite 301 Manchester, CT 06042 Email: help@mmnt-cpa.com Phone: 860.643.1001 Fax: 860.533.0405, Formerly known as Montovani, Murray, Nemphos and Tierinni, LLC, Matthew J. Tierinni, CPA Karl J. Badey, CPA, MST Philip S. Nemphos, CPA, CVA, Audits – Reviews – Compilations – Agreed-upon Procedures, 2021 Annual Report Instruction Form for Connecticut LLCs, Click here for the MMNT Employment Application. Automatic PPP loan forgiveness has been floated a couple of times. NO NEED TO HURRY JUST TO GET IT DONE! NEW GUIDANCE AND FORGIVENESS APPLICATION ANSWERS MOST OF THE OPEN QUESTIONS. 6 New PPP Loan Forgiveness Updates. Here we go again! The PPP limits compensation to an annualized salary of $100,000. HEADS UP: The payroll services are working hard to generate reports to support your PPP Forgiveness Application, but their quality is still very inconsistent. Because the PPP loan forgiveness process can be tedious, members of Congress have proposed legislation that would allow for a much simpler process of streamlined forgiveness for loans under a certain amount. What this means is that if you have a PPP loan which the covered period ends before the your Year End, you will need to calculate your forgiveness amount, even if you don’t apply for it by that Year End. You may apply for forgiveness as soon as you have used all of your PPP funds for acceptable purposes or you are past the loan forgiveness covered period as defined in the PPP Interim Final Rule. To our Clients and Friends, Last Friday (May 15, 2020), the Small Business Administration released its initial PPP Loan Forgiveness Application and related instructions. Skip to main content. PPP Loan Forgiveness Update November 19, 2020 Last night, Wednesday, November 18, 2020, the IRS issued a Revenue Ruling stating regardless of when the PPP Loan Forgiveness is submitted and there is a reasonable expectation the forgiveness will occur in the future, then the correlating PPP Loan expenses are non-deductible for the 2020 tax year. Fears of a late-October PPP surprise came to the SBA’s attention because the program’s loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of “10/31/2020” in the upper-right corner. New applications were not accepted after August 8, 2020, most earlier loan recipients completed their 8-week covered period over the summer, and the pace of revisions to the program finally slowed down. Borrowers are permitted to delay payment of payroll taxes even if they are planning to seek loan forgiveness. PPP Loan Forgiveness Update As of November 17, 2020, the IRS released a new Ruling and a new Procedure in regards to Paycheck Protection Program (PPP) loans. Blanket forgiveness: Most PPP loans were for $150,000 or less. There has been talk about a new loan program but making it a reality will require cooperation between both houses of Congress and the President. This bill was passed in response to feedback that suggested more money was needed for non-payroll related costs, and that the 8 week period was too short for businesses that needed […] Therefore, borrowers may defer payroll taxes for the period from March 27, 2020 through December 31, 2020. Menu. If small businesses have any questions regarding … As a result, there was not a lot new to talk about. Here are answers to six questions which will address both strategies and the rumors: At this point there is NOT a second PPP program in place. When completing SBA Form 3508 for loan forgiveness, include the eligible non-cash compensation payments described above on lines 6, 7, and 8 of PPP Schedule A. Paul Neiffer with the firm, CliftonLarsonAllen, posted an article to AgWeb today that focused on forginess options for PPP loans. Now borrowers are focused on strategies to maximize loan forgiveness while also trying to sort out some common PPP rumors. Loan Forgiveness Updates. For all other cases, it requires a sensitivity analysis of how much was spent when and what will your FTE headcount look like from 8-24 weeks. Example. Your lender MUST make a decision on your application for forgiveness within 60 days. The most compelling feature of the PPP program for entrepreneurs is that the total amount of the loan is forgivable if properly used. Right from the start, the Paycheck Protection Program (PPP) has been full of surprises. Congress just passed legislation that creates funding for additional Paycheck Protection Program (PPP) loans for small businesses. Update on PPP Loan Forgiveness. PPP Loan Forgiveness Calculation Form Coronavirus (COVID-19): Relief options and Additional Resources. This means that you can calculate your best option after the fact. If they do come to agreement, expect that you will need to show a reduction in sales or profits to be eligible. President Trump has officially signed a bill passed by the House and the Senate that loosens the requirements for PPP Loan forgiveness. If you have any questions, please call MMNT at 860-643-1001. The CARES Act requires that you APPLY TO YOUR LENDER FOR LOAN FORGIVENESS at the end of the eight-week period following receipt of your loan. Late Wednesday evening 11/18/2020, the Department of Treasury issued a press release that specifies their position is that if Paycheck Protection Program (PPP) forgiveness is reasonably expected then expenses paid with PPP funds … Frequently asked questions What’s the biggest loan I can get? Regardless of whether you applied for forgiveness, the expected forgiveness amount will reduce those expenses on their 2020 filing. Heidi, the sole owner and worker, operates her business as a C corporation. It has been awhile since we updated our clients and friends about the Payroll Protection Program (PPP). The Small Business Administration (SBA) is working to finalize the details on both. Our experts stand ready to help you with your loan as well as your unique finance and accounting needs – Experts@FahrenheitAdvisors.com. The banking community is also cautious about opening their portals only to have the government change the rules once again. This procedure also states that you can deduct the expenses in 2020 if you forgo forgiveness of the loan. The end result is neither tax harm nor a tax benefit. Help is only a phone call away. We have talked to a lot of bankers about this and have not heard a lot of excitement about the program. They have been burned before, spending time and money on programming and communication that ended up being worthless. Update Regarding PPP Loan Forgiveness. As mentioned during our last update, the SBA and US Treasury released a new, simpler forgiveness application Form 3508S for PPP borrowers who have loans of up to $50,000. This Procedure states that those denied will have the option to take those expenses in 2021 or have the option of amending their 2020 return to include them. NEW PPP LOAN FORGIVENESS RULES UPDATE. In general: The GOOD news is that you have 10 months from the end of your covered period to apply for forgiveness. 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