PPP Forgiveness Fogginess

A photo of foggy road

Last week, a business owner emailed me asking, “Any word on the fogginess date?” Although they meant to type “forgiveness”, the typo is an accurate description of what’s going on with PPP forgiveness.

We’ve had this forgiveness discussion with many physicians and business owners and understand the fogginess causes some anxiety. As we near the end of a tumultuous year, many doctors and business owners are eager to get their forgiveness amounts approved to get the loan off their books and off their minds. However, there are a few reasons we recommend waiting before applying.


First and foremost, the SBA is still actively updating their Frequently Asked Questions – choosing to wait for final regulations could end up saving you money and time.  Since PPP opened, we’ve seen major changes in the rules set by the SBA – varying from applicant eligibility, fund use, and even the repayment schedule. The PPP forgiveness process is open, but not set in stone, just like the application and usage rules when they began.

Covered Period: One of the changes that affects business owners directly is the “covered period” which shifted from 8 weeks to 24 weeks. Everyone who received a PPP loan after June 5th has a 24-week window to spend their loan, and that time period is likely not yet up.  If you apply early, you may not get the entire amount forgiven.  Anyone who received a loan prior to June 5th may choose between the 8-week and 24-week covered period. By choosing the longer 24-week pay period, you have more time to spend the money on payroll and non-payroll costs to ensure more of the loan is be eligible for forgiveness.

You May Not NEED to Apply at All: There is a proposal that all PPP loans of less than $150,000 may be forgiven by simply signing an affidavit.  The application will require an FTE calculation and mounds of evidential documents (bank statements, tax forms, mortgage interest payments, a copy of your business lease and your rent/lease payments, and invoices/receipts/cancelled checks from utility payments)  – all which may end up not being needed if this legislation is signed.


Another important reason to wait is that we do not yet know how expenses paid by PPP loans will be addressed by the IRS. Usually, if a debt is forgiven, the expenses paid for by that debt are not allowed to be deducted. From the beginning, it was made clear the forgiven part of your loan will be tax-free.  As the rules stand now (even as of last week), this rule is in place and the IRS says you cannot write off expenses paid for with the forgiven loan. 

If you have to include the expenses as income, you’ll be facing a higher tax bill than normal.  However, it is expected that Congress will correct this through legislative action by the end of the year.  If that is not the case, practices and small business owners will still see a benefit because their loan is likely more than what they will owe in taxes, but some members of Congress feel disallowing these deductions is contradictory to the overall goal of the PPP, which is to help small businesses survive.

Wait Until The Coast is Clear

You only get to apply for forgiveness ONE time, so applying early could mean missing out on an easier process or more forgiveness options.  Since Congress and the SBA are still discussing changes, even the American Institute of Certified Public Accountants and the American Banking Association recommend holding off until guidance is complete. However, if you are anxious about your 2020 tax situation, please contact one of our advisors.  We can help you by preparing projections to give you some peace of mind.

Earl Blackmon, Shareholder & Strategic Consultant

Earl is our leader of our Wealth Management services. As a specialist in processes efficiency and accounting issues for businesses, Earl helps clients achieve maximum profitability through careful financial, process, and wealth management consulting.

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