Brittany Besler, MBA, CPA, Esq. is a tax consulting attorney at Westborough accounting firm AAFCPAs.
Updated: January 25, 2021
10 things
10 Things I know about ... How the December stimulus impacts PPP borrowers
By Brittany Besler
10) Stay in contact with your trusted advisors. Your CPA, lawyer, and banker are typically on top of all the benefits, requirements, and everything in between on the Paycheck Protection Program. AAFCPAs anticipates a flurry of new applications.
9) There is likely no benefit to applying for forgiveness right now. There will be a right time, but the Small Business Administration, Internal Revenue Service, and other governmental agencies are busy writing up new procedures. The new legislation provided streamlined methods and may make the process easier for borrowers who wait.
8) Simplified forgiveness for loans up to $150K. The SBA has been mandated to come up with a one-page application for loans up to $150,000.
7) New eligible expenditures. There are new costs your PPP loan may be used for, including expenditures on software, cloud computing, HR & accounting, personal protective equipment or other safety alterations. Group insurance benefits are included in payroll costs eligible for forgiveness.
6) It is complicated. Certain rules in the new stimulus package are retroactive, meaning they apply as of the CARES Act (March 27). Others apply as of March 27, but only if you have not applied for forgiveness yet. Other rules apply as of Dec. 27. And, certain programs (I’m looking at you employee retention credit) have different rules in 2020 than they do in 2021.
5) The EIDL advance does not reduce forgiveness. The Economic Injury Disaster Loan advance grant ($1,000 per employee limited to $10,000) will not reduce PPP loan forgiveness. For those who already received their loan forgiveness and it was reduced for the EIDL grant, hang tight.
4) New eligible entities. 501(c)(6) organizations are now eligible for the program, and while they have their own requirements for lobbying, they do not need to meet the 25% decline in revenue test.
3) Choice of covered period. You can now choose any period no shorter than 8 weeks and no longer than 24 weeks. This is retroactive, but only for those who have not filed for forgiveness.
2) The PPP eligible expenditures are tax deductible. This was likely the best news out of the new act. Congress has overridden the IRS’s position that forgiven expenses should not be an allowable deduction.
1) Having a PPP loan no longer disqualifies you for the Employee Retention Credit. The new stimulus package makes those with a PPP loan eligible. Further, the ERC changes its rules from Jan. 1 to June 30; it becomes easier to qualify, and the credit is more beneficial.
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