Just yesterday, a bipartisan proposal in congress has taken shape to potentially become a reality. Three key provisions from this potential legislation for business owners:
- Another round of PPP loans aimed specifically at businesses that can demonstrate a sustained drop in revenue of at least 30% with up to 300 employees would qualify for additional funding. The expenses allowable under this second round are more broad in their application, making it easier to use the funds in a manner which will be forgiven.
- Lawmakers are proposing simplifying the forgiveness process for all loans up to $150,000. It is unclear from this first read whether or not this will apply to existing PPP loans or just the new ones under this additional funding. We do anticipate it refers to loans in existence already.
- This bipartisan legislation also would propose to make expenses paid with forgiven loans or those anticipated to be forgiven tax deductible as intended by the original Cares Act Legislation
Here is the link to the article posted on CNBC yesterday
We will certainly keep you posted on the developments as they become available.
SBA LOAN PAYMENTS MADE ON THE COMPANIES BEHALF
Also yesterday was the surprise that SBA borrowers may not have been anticipating. Part of the CARES act provided that existing loan holders received 6 months of loan payment relief. Yesterday, the SBA notified all SBA lenders to instruct them to send 1099-MISC to all borrowers for the principal, interest, and forgiven fees, making them 100% taxable. There won’t be any tax free treatment on these relief efforts.
As always, we are here to help and will continue to share updates on all areas pertinent to legislative and tax changes and clarifications that impact our business owner clients.
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