May 18, 2020 – The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act established the Paycheck Protection Program (“PPP”) that provides funding for small businesses financially impacted by the COVID-19 pandemic. Loans made under the PPP are eligible for forgiveness if the proceeds are used for qualifying expenses in the eight-week period beginning on the loan date. (For previous tax alerts regarding the CARES Act and SBA loan programs, please see the Whitley Penn COVID-19 resource page that can be viewed by clicking the link: https://www.whitleypenn.com/covid-19-update/. )
On Friday, the U.S. Small Business Administration (“SBA”) released the PPP loan forgiveness application. A borrower in the PPP program must complete the document and submit it to their lender (or the lender servicing their loan) or file it electronically through their lender. The application and accompanying instructions provide borrowers a step-by-step methodology to determine the amount of the loan forgiveness. The SBA also indicated that it expects to release additional rules and guidance to assist borrowers in calculating the loan amount eligible for forgiveness.
The loan forgiveness feature is a key component of the PPP loan. Borrowers will need to perform a detailed analysis and make a series of detailed computations to determine the forgivable amount. Whitley Penn has a task force of professionals available that can help you with this and any other matters related to the small business loan process. Please contact us if you have any questions or require additional assistance.
The PPP loan forgiveness application and instructions can be downloaded from https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf
Whitley Penn is continually monitoring the tax and economic developments related to the coronavirus pandemic and will send out additional alerts in the future. In the interim, please contact your Whitley Penn tax advisor if you have any questions or require any additional information.