PPP Loan Forgiveness Tax Relief… Finally Clarified!
In the $2.3 Trillion coronavirus relief package passed by Congress last week and signed by the President last night, we finally received the clarification we’ve been waiting for, and hoping for! Here are the highlights:
- PPP Loan Clarification:
- Expenses paid for with PPP loan proceeds are deductible!
- $150,000 automatic forgiveness of loan with simplified forgiveness application form – 24 days
- Second Round of PPP Loans (being referred to as “PPP2”):
- Must have 300 or fewer employees
- Have fully used first PPP loan
- Can show 25% gross revenue decline in any 2020 quarter compared to the same 2019 quarter
- $10,000 EIDL Grant Forgiven:
- In prior regulations, the SBA had taken the position that a borrower who had received the PPP loan and the EIDL Grant ($1,000 per employee up to $10,000) would not have both forgiven. The new legislation allows for forgiveness of both if used for qualified purposes (payroll, etc.).
- SBA 7(a) and 504 loan payment waivers
- The bill requires lenders of SBA 7(a) loans to provide complete payment deferment relief for impacted borrowers with loans guaranteed under such section 7(a) for a period of not more than 1 year.
- Additional Taxpayer and Dependent Stimulus: $600 per taxpayer & $600 per qualifying child
- Other Notable Items:
- 100% deduction for business meals for 2021 and 2022
- $600 charitable deduction (MFJ) for non-itemizers (“above the line”)
This represents welcome relief to so many entrepreneurs and employers! Should you have any questions about how this new PPP Loan Forgiveness bill impacts you and your business, please reach out to our team and we would be happy to chat with you about your specific circumstances. And, if you know of other entrepreneurs who need the kind of service and expertise that Tembo provides, please feel free to send them our way!
CEO & Founder