Paycheck Protection Program Extension

Friday, July 10, 2020

Potential borrowers still hoping to get a cut of the PPP pie have been given until August 8th.

Potential borrowers still hoping to get a cut of the PPP pie have been given until August 8th to apply for their initial PPP loan.  President Trump signed the “PPP Extension Act” on July 3rd, which consists of the same exact language that passed the Senate on June 30th, mere hours before the window to submit applications for the PPP was set to close. 

This article was written to help PPP borrowers and their advisors understand what the rules are today for small business owners, and what guidance is still needed to clarify uncertainties. Over the past few weeks, we have fielded hundreds of questions from small business owners and advisors and and have had thousands attend free webinars on the PPP program.  Our next free webinar will be on Wednesday, July 8th at 12:30 p.m. for 30 minutes entitled PPP Forgiveness Basics For Owners and Employees of Small Businesses: Where Are We Now. You can sign up for this by emailing me at info@gassmanpa.com and putting “end the confusion” in the subject line. If you are an advisor, please feel free to share this article, and our empathy, for you and your clients.  This has been a very hard road for those trying to save their businesses while spending money to get forgiveness under rules that have changes just about as fast...and furiously...as a roller coaster at a now shut down amusement park. 

Special thanks to Brandon Ketron, J.D., CPA, LL.M., who works for me and is the real brains behind our law firm’s ability to help with these questions, and Kevin Cameron, CPA, who has created a spreadsheet that Brandon and I have helped to improve that is being used by hundreds of CPAs and thousands of borrowers to track and navigate forgiveness.  Free videos on how spreadsheeting forgiveness works can be found at the following links, (4 minute video) and (47 minute video).  The AICPA also has a spreadsheet that is free for its members, and can be found on its website.  

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More than 4.8 million small businesses have already applied for PPP loans designed and implemented to keep businesses afloat and keep paychecks in employees’ hands. The Program was set to wind down with nearly $130 billion still in its coffers and thousands of borrowers still confused or unable to find lenders who would cooperate to enable them to borrow.  Most of these borrowers consist of individuals who are known as “independent contractors” and “sole proprietors” because they file a Form Schedule C as a small business or a Schedule F as a farmer, as part of their Form 1040 individual tax returns, and own their own trade or business individually or through a wholly owned Limited Liability Company (“LLC”) that is “disregarded” for income tax purposes. For convenience, I am referring to these individuals as “Schedule C Filers” below. Many of them have been called by worse names. 

Many small businesses use LLCs or companies that have elected to be treated as “S corporations” which file Form 1120S income tax returns, and therefore different rules apply to them.  Other companies are treated as “C corporations” and file Form 1120 tax returns, with other rules applying to them.  Finally, some joint owners of businesses and some LLCs and other entities file a Form 1065 tax return as “partnerships” for income tax purposes, with even different rules applying to them. 

See also

PPP Extension

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