The Paycheck Protection Program ends this month! The deadline to apply is on Wednesday, March 31. All eligible businesses can apply through a participating lender until then. The interest rate on all PPP loan balances is an eye-catching 1%. That would be $100 in interest payments per year, per $10,000 in unforgiven loan proceeds.
Congress remains clear that a forgiven PPP loan is completely tax-exempt and is not taxable income. Furthermore, business expenses paid for with PPP funds can be written off like everyday business expenses.
Does a forgiven PPP loan become taxable income? After the passage of the CRRSAA into law in December 2020, Congress made clear that a forgiven PPP loan is completely tax-exempt and is not taxable income.
If you already have received PPP funds, you are allowed to use the money for both the salaries of your employees and the employee taxes that you would normally withhold and send to the IRS. You can’t, however, use these funds to cover the business’ portion of the taxes that go toward things like FICA and Medicare.
What can I spend my PPP funds on?
Generally, PPP funds can be used for four purposes:
- payroll
- mortgage interest
- rent/lease
- utilities
Payroll should be the major use of the loan.
Before rushing to apply, here are some questions to answer to see if your business is eligible.
How many employees do you have? Because this is a small business loan, it must be less than 500. Are you open and operational? Have you been operational before February 15th, 2020? This is a must. If you have already received PPP funds you may be eligible for a second draw! The same guidelines apply as your first loan, however, there are a couple of additional conditions. To get a second draw, your business can have no more than 300 employees & you need to show a 25% or greater reduction in gross revenue.
Find out more by visiting the Small Business Administration Paycheck Protection Program (PPP) website.
Ready to apply for your PPP loan? Call 406-894-2526 or book your Paycheck Protection Program (PPP) consultation online today!
