Last night Congress finally passed the long awaited stimulus bill. There are many items in this bill that will have an impact on both individuals and businesses. Three of the major items relate to the Paycheck Protection Program (PPP).
First, there will be a second round of PPP loans available to certain businesses. This round will differ in that the business will have to document a drop in revenue of at least 25% in any quarter of 2020 compared to 2019. If you are a business client of Downs & Associates CPAs, LLC, and we reconcile your bank statements on a monthly basis, we will prepare the calculation and let you know if you qualify. If you are a business client of Downs & Associates CPAs, LLC, and we do not reconcile your bank statements on a monthly basis, please provide us with all of your bank statements (or some other method to verify your gross monthly revenue) for all of 2019 and 2020.
The next major change relates to the forgiveness of PPP loans of $150,000 and less. The bill directs the SBA to develop a one page document that the borrower can sign to certify that they used the proceeds of their PPP loan correctly, and the SBA will forgive the loan. Those with loans of $150,000 and less will only be subject to audit if they commit fraud or do not use the proceeds of the loan properly.
The third item is probably the most important. This bill clarifies the intent of Congress that neither the receipt of funds under a PPP loan is a taxable event and all expenses that are paid with the loan funds are deductible. This means that those that received a PPP loan truly received tax free money.
There are many other provisions contained in this bill. Please see the article below for a good summary of the items in the bill.
Please get in touch with Downs & Associates CPAs, LLC if you have any questions.
Downs and Associates CPAs, LLC