Galleros Robinson, a Certified Public Accounting and Business Advisory Services firm with offices in Florida, Texas, and New York, has released a business update suggesting small business owners wait until next year to apply for PPP (Paycheck Protection Program) loan forgiveness.
“We believe that most borrowers would be wise to take their time with the forgiveness process,” Stewart Robinson, a partner at the firm said in a release. “Many banks and lenders are holding off on processing forgiveness applications because they are waiting to see what will happen in Congress, and hoping for more guidance from the Small Business Administration.”
CNBC reported Friday that many small businesses that applied for a PPP loan and an Economic Injury Disaster Loan Advance–which offered $1,000 in grant money for each employee, up to $10,000–will have a reduction in the amount forgiven from their PPP loan.
Robinson also believes the government will make changes to their policies making easier for small business owners to fill out forms and show where the money was spent.
“We believe that Congress will save many small business owners from the headache of having to fill out lengthy forms,” Robinson said. “Currently, the HEALS Act, if passed by Congress, would allow borrowers with loans less than $2 million to apply for forgiveness without having to submit paperwork showing how the money was spent. Borrowers would simply be required to “certify” they spent the PPP funds on expenses deemed eligible under the program.”
The firm is also concerned about the Internal Revenue Service ruling expenses paid with forgiven PPP loans will not be tax deductible. According to the firm, Congress specifically stated the proceeds of the PPP loans, if forgiven, would be exempt from taxation.
“Such an exemption is pointless if related expenses cannot be deducted,” Robinson said in the release. “It might as well have been taxable with related expenses being deductible.”
The PPP was implemented to help small businesses pay employees and deal with expenses during the coronavirus pandemic. The program had issues in its rollout concerning who was taking money from the program and that women-led and minority businesses were unable to apply for and receive funds.