PPP Loan Forgiveness, Cutting Through the Muck

With all of the speculation and rumors surrounding the PPP Loan Forgiveness Program, it's no surprise that many of our clients flood our phone lines with questions. Who can blame them? The biggest questions that come across are 'how do I file for forgiveness?' or 'how do I know how much will be forgiven?'.

While these questions are simple, the application can be quite complex because the vast situations that many people find themselves in. If, you do have a complex situation or need further questions answered, please contact a tax preparer or your lending agency that made your PPP Loan.

The first question regarding PPP Loan Forgiveness is usually 'How do I file for forgiveness?' because this question usually contains the questions about how much will be forgiven. The most direct answer to this question is you will need to go through your lender to have your loans forgiven. Most lenders are still scrambling at this time (with third-party design companies) to create a system for their clients to use. Yet, they are still awaiting any final changes from the SBA to ensure that their systems are complete. There is lobbying at this time to have Congress institute a 'check the box' scenario on loans under $150,000.

'How much will be forgiven?' This question is usually posed by people looking to create an opportunity out of this situation. Considering the cash crunch that many companies are seeing at this point in time, who can blame them for wanting to manage their own cash flows. It is a scary time because we face a lot of uncertainty. So, the highlights on how much will be forgiven resides in meeting the SBA's guidelines.

- You must us a minimum of 60% of the money you received to pay your payroll.

- The payroll paid in 24 weeks (or use the 8 week option if received before June 5th)

- Owners can only include a maximum of $20,833 for 24-weeks or $15,385 for 8-weeks.

- Employees that do not return despite employers attempts otherwise, may have those wages forgiven. (please contact your preparer to determine this)

- If you reduce your employee's wages by more than 25%, the amount forgiven will be reduced.

It is important to note that these are only highlights of the rules given by the SBA. It is always recommended that you contact your loan provider or a professional preparer regarding your PPP Loan Forgiveness circumstances. Please stay healthy and safe during these times, as we come together to help each other through these difficulties that will end.