Forgivable loans are available for small businesses, non-profits and self-employed taxpayers under the Paycheck Protection Program, (PPP) which received new funding by the Federal government on December 27, 2020. The new law adds $284 billion to the Paycheck Protection Program and $20 billion to Economic Injury Disaster Loan grants. In this round, the legislation intends to provide targeted relief for small businesses and non-profits that may have missed out on the initial PPP offering in early 2020.
However, if your business has fewer than 300 employees, and it has experienced a revenue drop due to the pandemic, you may be eligible for a second PPP loan, even if you already obtained a PPP loan earlier in 2020. The deadline for using PPP loan funds has been extended to September 30, 2021.
Obtaining forgiveness of the new PPP loan is also simplified. Borrowers who receive $150,000 or less in PPP loans need only to submit a one-page forgiveness form online, certifying their compliance with the program requirements.
The new legislation also clears up questions regarding the tax deductibility of business expenses that have been paid for with forgiven PPP loans. While formal language from the IRS is still pending, the legislation itself allows PPP-paid business expenses to be tax-deductible, even if the loan is forgiven. Please ask your professional tax preparer for details; this blog does not serve as tax advice of any kind.
Please note that there are myriad details involved in the PPP loan program, and the SBA.gov website has not yet been updated. It is best to consult with your accountant, professional tax preparer or business attorney regarding any questions. You may wish to contact your financial institution to confirm their participation in the new PPP loan offering.
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