Is It Helpful?
The SBA has recently issued updated guidance on PPP loan forgiveness. The short story is that loans under $50,000 (roughly 70 % of all issued loans met this requirement) will be forgiven, the original application deadline of October 31, 2020 is modifiable, and the process has been simplified with compliance guidelines boiled down to a two page document from the original eleven page manifesto. Additional legislation proposing to increase the all but automatic forgiveness threshold from $50,000 to $150,000 is pending. But as evidenced by the unclaimed $134 billion of PPP allocated funds, there is no shortage of money and the amounts are not the issue. Business owners are having a hard time understanding whether this is a loan or a grant, what the repayment terms and timelines are, and wrapping their collective brain around one question: “Will this actually help my business?” And weighing the administrative overhead and the efforts of jumping through compliance hoops against the potential benefits. Additionally, the IRS has been ambiguous on the accounting designation of PPP funds stating that money received from PPP and spent on payroll and overhead may not be recognizable and written off as a business expense. The article below provides an introductory overview and food for thought in regard to the potential future tax treatment of PPP dollars, which adds to the pile, but must be considered.
IBA is Pacific Northwest’s premier, full- service business brokerage and routinely engages with professionals in the legal, commercial lending, and accounting fields when facilitating sales of privately held companies. If you are a business owner who has additional questions about your PPP loan and would like to be referred to a trusted tax professional, please let me know.