- SBA opens forgiveness portal for PPP this week, but applicants have been advised to bide their time as further guidance emerges
- Partial forgiveness options available, and low interest rates can also be attractive to those who need to pay the loan back
- Questions remain on issues such as tax deductions
With the closing of the Paycheck Protection Program on Aug. 8, the Small Business Association has opened its forgiveness portal for those who borrowed funds. However, tax professionals are urging businesses to avoid applying for forgiveness right away; instead, they should stay updated on any further guidance and see whether outstanding issues are addressed.
PPP has approved more than 5 million loans amounting to more than $525 billion, though businesses showed more reluctance to apply as the rules on how the money could be spent went through numerous changes. A total of $126 billion in approved funding had not been distributed by the time the PPP ended.
PPP loans are forgivable if at least 60 percent of the funds went toward payroll expenses. However, the SBA has been scrambling to address questions raised by the process, including whether certain expenses count toward payroll and how forgiveness if affected if an employer takes steps such as rehiring employees at reduced hours or wages. The question of whether a PPP loan can be deducted on a business owner’s taxes also remains up in the air.
Partial forgiveness is an option if businesses did not contribute at least 60 percent of their PPP loan toward payroll. The loans also have an interest rate of just 1 percent on a term of two or five years, which some businesses may feel comfortable absorbing.