Small Business Administration Releases PPP Loan Forgiveness Applications
On Friday, May 15, the Small Business Administration (SBA) released Form 3508, Loan Forgiveness Application, with no additional guidance issued by the Treasury Department. Most were encouraged to see the forgiveness application. However, while the application itself answers some questions, it creates other, unanswered questions. We will continue to update our information as clarification becomes available.
Congress may Overturn IRS’ Position in Notice 2020-32 that Expenses Resulting in Paycheck Protection Program Loan Forgiveness are Not Deductible
The IRS’s position has been publicly criticized by the AICPA and by key members of Congress, including, Senate Finance Committee Chair, Chuck Grassley, R-Iowa, who indicated that the IRS’ position is contrary to the intent of the Paycheck Protection Program, and Chair of the House, Ways and Means Committee, Richard E. Neal, D-Mass, whose spokesperson indicated that future legislation would reverse the IRS’ position in Notice 2020-32.
IRS Clarifies That Expenses Resulting in Paycheck Protection Program Loan Forgiveness Are Not Deductible
On April 30, 2020 the IRS issued Notice 2020-32 which clarifies that no deduction is allowed under the Internal Revenue Code (“Code”), for an expense that is otherwise deductible if the payment of the expense results in covered loan forgiveness under section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), Public Law 116-136, and such loan forgiveness is excluded from gross income under the Code.
Federal Government Temporarily Postpones Certain Import Duties, Taxes, and Fees
U.S. Customs and Border Protection (CBP) regulations were modified April 19, 2020 to temporarily postpone the deadline for importers of record who have suffered “significant financial hardship” to deposit estimated duties, taxes, and fees the importer is normally obligated to pay as of the date of entry, or withdrawal from warehouse, for consumption, for merchandise entered in March or April 2020, for a period of 90 days from the date that the deposit would have otherwise been due.
Paycheck Protection Program Funds Depleted and Economic Injury Disaster Loan Applications No Longer Accepted
As of Thursday, April 16, 2020, the Small Business Administration (“SBA”) has announced that the Paycheck Protection Program created by the CARES Act has exhausted the 349 billion dollars allotted for the program and that no new applications will be accepted. The Economic Injury Disaster Loan (“EIDL”) program, which offered advances for up to $10,000 that did not need repaid, has also ceased accepting new applications due to exhausting available funding.
U.S. Senate Passes SBA Economic Relief Bill
Early this morning, the United States Senate unanimously approved Senate Bill 3548 allowing the expansion of the SBA 7(a) loan program to provide economic relief to small businesses through the new Paycheck Protection Program.
300 Billion SBA Loan Program Expansion Considered by Congress
A second SBA loan relief program is currently being considered by Congress. The program is intended to incentivize small businesses to retain employees by making a portion of the loans forgivable.
Illinois Small Businesses Now Eligible to Apply for SBA Disaster Loans
The state of Illinois has been added to the list of Presidential and SBA Agency Declared Disaster States. This designation enables Illinois small businesses to apply for low-interest SBA Economic Injury Disaster Loans in an amount of up to $2 million, depending on the applicant’s actual economic injury and financial need.
All Counties Within Ohio Have Received an Economic Injury Declaration for U.S. Small Business Association
All counties within Ohio have received an economic injury declaration from the U.S. Small Business Administration (“SBA”) that enables eligible small businesses in Ohio to apply for an Economic Injury Disaster Loan in an amount not to exceed $2 Million.
SBA Relaxes Rules for States Seeking Economic Injury Declaration Related to COVID-19
On March 17, 2020, the United States Small Business Administration (“SBA”) relaxed its rules for states or territories seeking an economic injury declaration related to coronavirus (COVID-19). These changes will expedite the ability of small businesses to apply for Economic Injury Disaster Loans for working capital to mitigate economic injury caused by COVID-19.
Relief Available for Businesses to Ease Burden Caused by COVID-19
Businesses will be directly and negatively affected by such measures, causing serious financial difficulties for the businesses themselves and their employees. Several potential avenues for relief are available to businesses to help ease the burden caused by governmental restrictions and the simultaneous market downturn.
Coronavirus Business Interruption
The spread of the novel coronavirus (COVID-19) across the globe has, and likely will continue to be, a major disruption to world economies and will affect businesses across the United States. With the acceleration of the spread of the virus in the United States, unprecedented steps are being taken to control and hopefully contain the spread of the virus. As a result of these efforts, major business, tourist and entertainment events have been canceled, and the possibility of disruption to the manufacturing and import supply chain exists. Should mandatory quarantines or work place shut downs occur, many business and contractual obligations will likely be unfulfilled.