PPP Loan Expense Deductibility Clarification Update

Fri November 20, 2020

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The Department of the Treasury and the IRS released guidance yesterday clarifying the deductibility of PPP related expenses.  You can review the press release and supporting documentation HERE.  There are tax ramifications and forgiveness application timing to be considered.  We strongly suggest you consult with your CPA or business financial advisor to determine the best course of action for you.

For those of you who have not applied for forgiveness, we suggest you get in touch with your lender to understand their specific forgiveness process and documentation requirements.

You, your lender, and financial advisor can determine which PPP forgiveness loan form is appropriate for you. This would be one of the three following SBA forms:

  • Form 3508S was recently released for borrowers with loans that are $50,000 or less. 
  • Form 3508EZ is for employers who did not reduce employee salary or hours by more than 25% or did reduce business activity due to COVID health guideline restrictions and did not reduce employee salaries by more than 25%.
  • Form 3508 is for loans greater than $50,000 and are unable to meet safe harbor exemptions for reductions to FTE employee or salary/wage levels.

We are hearing that most banks have individual web portals in which you fill in supporting fields vs. filling out the actual SBA form.