PPP Loan Get Ready to Apply for Forgiveness


The shifting terms and guidance around the Small Business Administration's Paycheck Protection Program loan forgivness is confusing and frankly frustrating. If you were lucky enough to get a load, now comes the next hurtle, making sure that you are eligible for loan forgiveness. 

For ordinary businesses, the load is forgiven if at least 75% of the money is used to pay employees. The other 25% can be used for other business expenses, including mortgage interest or rent and utilities. However, if you are your own employee, the SBA website is contradictory about whether you can use at least 75% to pay yourself.  According to the PPP rules, recipients must spend 75% of the loaf on payroll costs within eight weeks to be eligible


for load forgiveness. That clock starts as soon as the money is in the bank. Please note that each bank has different requirements - you will need to contact your lender to ask exactly what they want. Also keep in mind that the PPP rules change constantly - the SBA now has a daily updated FAQ sheet under Program Rules. I have researched guidelines that artists can use to secure loan forgiveness. Square, Inc has the clearest set of instructions I have found. Square PPP loan forgiveness: What we know now (5/4/20) Another key change came last Thursday from the IRS. PPP loan forgiveness was supposed to be deductible in 2020 taxes for borrowers. But the IRS threw a monkey wrench into that plan when it said the amount forgiven would not be deductible. Legislation was introduced Tuesday in the Senate to overrule that IRS notice and clarify that ordinary expenses funded by PPP loans are deductible by taxpayers. The bill, the Small Business Expenses Protection Act of 2020, is currently in the Senate Finance Committee. Best Practices:

  • If you don't have a business bank account, establish a second account at your bank exclusively for your PPP loan proceeds - less difficult to track and verify usage of the money to validate forgiveness.

  • Keep detailed records of everything you spend with the PPP money

  • Apply for forgiveness on week 8

  • Don't switch banks until the loan is paid back or forgiven

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