The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act established the Paycheck Protection Program (“PPP”) that provides loan funding for eligible small businesses. Under the CARES Act, a PPP loan may be forgiven if the borrower uses the proceeds to pay certain cost (including payroll, occupancy, and other specified expenses) during a qualifying payment period beginning on the loan date. The amount of forgiven PPP indebtedness is excludible from gross income for Federal income tax purposes.
Yesterday, the U.S. Senate approved a bill passed earlier this month by the U.S. House of Representatives that extends the program. The “PPP Extension Act of 2021” (“Act”), passed by a 92-7 vote count, extends the deadline for eligible taxpayers to apply for a PPP loan by an additional 60 days. The Act will now be sent to President Biden to sign into law.
The previous deadline for submitting a PPP loan application was March 31, 2021. Following the passage of the Act, eligible borrowers now may submit applications through May 31, 2021. Successful applications submitted by the May 31 deadline should receive approval by the U.S. Small Business Administration (“SBA”) by June 30, 2021.
Since the beginning of the year, the SBA has approved over 3 million PPP loans totaling over $195 billion. An additional $79 billion previously authorized by Congress remains eligible to be loaned under the program. The SBA will close the program if the remaining available funds are loaned out before May 31, 2021.
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