By: Todd Schanel, CFA, CPA, CFP®
on August 18, 2020

PPP Loan Forgiveness-CPA-JupiterFL While the deadline for applying for loan forgiveness is ten months after the end of the covered period, the inclination to start the loan forgiveness application process sooner rather than later is understandable. But there still may be reasons to wait.

Based on what we know at this time, this is was what we recommend.

Reasons for Waiting
  • PPP loan recipients who have not used up their PPP funds should generally wait to apply until the funds are used in their entirety. There may, however, be some exceptions to this general rule.
  • For PPP recipients who have used up their funds, they still may want to wait to apply. First, the SBA just recently opened the PPP loan forgiveness portal, and there are certain to be some problems. Furthermore, most banks are still not ready to accept applications.
  • Second, Congress may once again make some changes to the law, and each time there have been changes, the rules have become more generous. For example, one possible change that has been proposed is to exempt loans under $150,000 from having to provide documentation.
Reasons for Applying Right Away
  • Current guidance suggests that the headcount test applies to the time-period that ends the date the funds are exhausted. It is possible however that this rule could be clarified so that a borrower who uses the 24-week covered period is subjected to an FTE test for the entire 24-week period, even after the funds are used up.  While this is not likely to be an issue, a borrower who is facing an FTE reduction after the funds are used up may want to apply sooner rather than later.
  • A borrower who is in the process of a merger or acquisition may want to apply early to so that the PPP loan can be removed from their balance sheet as soon as possible.

As more information becomes available, we will keep you informed.

Schanel & Associates is a CPA firm specializing in accounting, tax, business valuation and litigation support serving Palm Beach, Martin and St. Lucie Counties and beyond since 1993. Our CPAs and accounting professionals work with individuals, businesses, estates and trusts to provide everything you need under one roof. For more information, contact us today at 561-624-2118.
Todd Schanel has been a principal at Schanel & Associates since 2004, where he specializes in financial planning, tax planning and consulting services. He also serves as Founding Principal and Director of Investment Advisory Services at Core Wealth Management, our sister company, where he leads an accomplished professional team offering independent and objective financial advice to help clients achieve their financial goals. Todd has been a CFA Charterholder since 2005, and in 2007 he earned his Certified Financial Planner® designation and became a licensed CPA. In 2015, he earned the Certified Valuation Analyst (CVA) designation.