Tune in and listen to KRS manager Lance Aligo, CPA, on the Strategies & Ideas for Business podcast as he discusses where things stand now with Paycheck Protection Plan loan forgiveness.
Among the key points Lance shares:
- PPP has indeed been a lifeline for small businesses which were in danger of going under.
- Over the next few weeks there may a second round of funding, which will likely be much more restrictive in terms of who qualifies for assistance. It’s also likely to be a smoother, easier application process than the first round.
- While banks are accepting forgiveness applications right now, there are many inconsistencies across banks as to the forms and processes used. This creates an added layer of stress on business owners.
- The good news is forgiveness applications aren’t due for 10 months after your PPP loan coverage period is up.
- Note that loans over $2 million will be audited; loans $50k or under will be automatically forgiven as long as you certify that you followed the loan guidelines. There is some talk that the automatic forgiveness threshold may go up to $150k.
- The IRS stated expenses funded with a forgiven PPP loan aren’t deductible for tax purposes. This can have a big impact on your business’s tax bill. It may also impact the TCJA qualified business deduction, if you qualify for one. The kicker, says Lance, is this can change because it was not the intent of Congress or the SBA for the IRS to rule this way. It’s important to have your accountant run tax projections to see how your tax situation may be impacted.
- Documentation is key. Be sure you retain payroll records, mortgage statements and other documentation to support your use of the loan proceeds.
About the Strategies & Ideas for Business podcast
The Strategies & Ideas for Business podcast was founded based on host Michael Warady‘s efforts to help U.S. business owners and C-Level members maintain their awareness of all Federal, State, and Local tax incentives and strategies. Warady, who is also a certified financial planner and regional director at Illinois-based Source Advisors, invites knowledge leaders into his studio to speak about new strategies and ideas for businesses and what it means for the bottom line.