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PPP Loan Developments: Only $120 Billion Left, Favorable Forgiveness Guidance from SBA and IRS Tax Pitfall

From my article on Entrepreneur.com 

The SBA Paycheck Protection Program (PPP) is the most significant small- relief effort in modern history. A key component of the $600 billion-plus (and counting) stimulus rollout is that beneficiaries can have their loans forgiven so long as they use the funds for qualifying expenses, which can include , rent, mortgage interest and utility payments.

The program was extremely popular in round one, and the initial $350 billion in  was claimed in only 13 days. The SBA began approving an additional $310 billion from the second round on April 27, but as of May 10, only $120 billion in funding remained. (A good chunk of which is owed to dozens of publicly traded companies having returned multi-million-dollar loans.)

PPP Forgivable Loans Will be Unforgiving for Many

From my article on Entrepreneur.com

Many small business owners who have been approved for Paycheck Protection Program loans (“PPP”) are realizing that the loan isn’t as forgivable as they’d hoped.

The amount a small business can qualify to have forgiven must primarily be payroll costs. The SBA’s rulemaking has stated that at least 75% of the forgiveness request must be payroll costs but can also contain up to 25% of other approved expenses under the law such as rent, mortgage interest and utilities. That rule seems to be widely understood and so long as small business owners are spending 75% of their PPP funds on payroll this rule won’t frustrate small business owners when it comes time to forgiveness.

For details on the PPP loan program in general, please refer to my prior article here.