Congress has approved and President Trump has signed a second COVID-19 Relief Bill that includes another set of imminent business funding and certain loan provisions for existing COVID-19 business loans and expansion of the Employee Retention Credit.
- PPP Loan Forgiveness for 1st round applicants who have not finalized their loan forgiveness and for future 2nd round PPP applicants, forgiveness will easily be granted to those loans $150,000 or less via a one page application provided by the SBA.
- At this point we are not going to prepare any PPP loan forgiveness applications for those businesses that have PPP loans between $50,000 and $150,000 until the SBA puts out its new form and related instructions.
- 2nd round PPP applicants will need to show that sales have dropped 25 percent in the quarter they are applying for compared to the same quarter in 2019.
- PPP borrowers who are owned 20% or more by “Chinese Entities” are unable to receive a second PPP loan.
- PPP borrowers who received forgiveness will now be allowed to deduct the related PPP expenses such as payroll, rent, mortgage interest, accounting fees and utility expense.
- Forgiven PPP loan amounts will not be included in income, instead a corporation would embed the forgive loan amounts to your stock basis.
- For self-employed schedule C filer, your PPP loan forgiveness amount will not increase your gross receipts.
- PPP borrowers are now allowed to take advantage of the Employee Retention Credit on their payroll returns, the ERC credit is extended through 2021 and has increased to $7,000 per year.
- As a result, many affected businesses can apply for and expect to receive additional funds either through the second round of PPP loans or the Employee Retention Credit or both.
- However, please have patience as the SBA has yet to issue guidance and receive IRS comments and most lending institutions have yet to gear up for these changes.
As always, if you have any questions or would like us to assist you please feel free to reach out to Diapoules & Feinstein CPAs P.C.