PPP Forgiveness Update
Most of you have now completed the 24-week “covered period” window for using PPP funds that commenced when you received the funds. We have received questions about when PPP recipients should apply for forgiveness.
A few things to know first:
1. Forgiveness applications aren’t due until 10 months after the end of the 24-week covered period. For most of you, this deadline would be Summer 2021.
2. Whether they are forgiven this year or next, the IRS will consider the presumptively forgiven amount (probably 100% of PPP funds for most applicants) to be taxable in the 2020 tax year. Your CFOs have already been factoring that tax impact into your 2020 tax forecasts.
3. Applications for PPP forgiveness amounts up to $50,000 have now been simplified. It is possible that in the future that this ceiling will be raised, but no guarantee.
4. It is possible that in the future Congress may close the loophole that is making PPP forgiveness taxable, but no guarantee.
5. If we completed your original PPP loan application, we will automatically process the PPP forgiveness application at no additional charge.
Therefore, given the rush of activity we ordinarily have at year-end, we will begin processing PPP forgiveness applications we are responsible starting in February 2021, well ahead of the 10-month deadline.
The exception will be for practices that are being sold. Sellers: the originating bank should be informed that you are selling, the forgiveness application should be filed (if you have not, please notify us if you are selling), and if forgiveness has not been received by time of sale, an amount equal to the PPP loan will need to be set aside in escrow until forgiveness is received.
For clients who did their own PPP applications, you can apply for forgiveness at any time.
Please don't hesitate to reach out if you have any questions.