Over the last week, the SBA has issued a series of new rules interpreting the recent PPP Flexibility Act of 2020. 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. Here we go again! Update on the PPP loan forgiveness application . He is a member of Fahrenheit’s Leadership Team. 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. A loan review may occur which would require additional information, but we expect reviews to be rare due to the number of PPP loans. 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. Regardless of whether you applied for forgiveness, the expected forgiveness amount will reduce those expenses on their 2020 filing. 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. As a practical matter, borrowers accepting PPP loans should carefully read and understand each certification in the application and the promissory note. 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. It has been awhile since we updated our clients and friends about the Payroll Protection Program (PPP). 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. Blanket forgiveness: Most PPP loans were for $150,000 or less. We have talked to a lot of bankers about this and have not heard a lot of excitement about the program. An Update on PPP Forgiveness. 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. Paul Neiffer with the firm, CliftonLarsonAllen, posted an article to AgWeb today that focused on forginess options for PPP loans. August 29, 2020 | Kristine A. Tidgren. If they do come to agreement, expect that you will need to show a reduction in sales or profits to be eligible. In general: The GOOD news is that you have 10 months from the end of your covered period to apply for forgiveness. Check the reports carefully! 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. 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.”. The Small Business Administration (SBA) is working to finalize the details on both. As a result, there is not a lot of focus on the program by bankers. 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