The PPP loan forgiveness deadline is quickly approaching for anyone who got the first round of PPP in April or May.
In fact, the PPP loan forgiveness deadline will likely be August 2021 or September 2021, depending on when you exactly received your loan.
So, you have about 1-2 months to apply for PPP loan forgiveness if you haven’t already.
Out of 5.2 million loans given, that’s nearly 40%!
And we have a feeling there are going to be a lot of people who end up not getting their loan forgiven either because they simply “forgot” or they didn’t really “qualify”.
So, we want to ask you; did you get the first round of PPP?
Now in case you don’t know, the PPP loan will automatically convert into a standard loan at about a 1% interest rate if a small business does not apply for forgiveness.
And you have to apply within 10 months of the end of the covered period under which they had to spend the money according to the forgiveness guidelines.
This means you can only use the loan on payroll, rent, utilities, and other related expenses.
So let’s do a quick example.
If you got a PPP loan, May 15, 2020, and you had a 24 week covered period, that would mean your cover period comes to an end on October 30, 2020.
And 10 months from October 30, 2020 is August 30, 2021.
Now of course, if you got your loan in late May then the deadline may also fall in September 2021.
If you had an 8-week covered period, then we have to deliver some bad news.
The deadline for you is already over.
But for most small businesses, it was recommended to use a 24-week covered period anyway.
However, if for some reason you could not use the money after 8 weeks, you’re going to have to pay something back.
Now there are some people who are intentionally delaying their forgiveness application to maximize a separate tax credit that rewards businesses for retaining employees…
…which basically gives small business owners a tax benefit for each employee retained up to a certain amount.
But the PPP loan will likely outweigh the tax credit, so we suggest applying for forgiveness as soon as you can.
If you still need to apply for PPP loan forgiveness then you should reach out to your bank or the lender who gave your PPP Loan.
So in summary, if you receive the first round of PPP loan and you got a deposit in April or May, you need to take action asap and apply to get your loan forgiven.
Now if you need more help figuring out what to do with your PPP loans, or taxes in general, get in touch with one of our CPA tax experts today!
Contact us now to get started.