The Senate on Thursday passed the PPP Extension Act of 2021 with overwhelming support, extending the deadline for the Paycheck Protection Program to May 31 from March 31.

Is accrued interest on PPP loan forgiveness deductible?

When a PPP loan is forgiven, the SBA transmits a payment to the bank of the loan principal plus accrued interest. The Consolidated Appropriations Act (CAA) indicates that PPP loan forgiveness is non-taxable and all related deductions to the PPP loan forgiveness is allowed.

Should I use the 8 week or 24 week period for PPP forgiveness?

You may be able to wrap up the forgiveness process earlier. If you reduce your full-time employee count or employee wages after the 8-week period, that might reduce your eligible forgiveness amounts. However, a longer, 24-week covered period gives you more time to remedy any reductions in employee count or wages.

What happens to unused PPP loan funds?

If you spend your PPP funds on “authorized” expenses, using 60% for payroll, you can have the loan forgiven — you don’t have to pay it back. The implication is that you then must pay back the loan or that portion of the loan not used on authorized expenses.

When should I apply for PPP forgiveness?

Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination.

When does the PPP loan program expire?

Therefore, a borrower could use up to 40% of its loan proceeds on rent, utilities, and other qualified expenditures. The PPP program is now scheduled to expire on December 31, 2020. This means, in part, that borrowers presumably have until December 31, 2020, to restore full-time equivalent (FTE) employee count and any salary reductions.

What happens when your PPP funds run out?

If your PPP funds run out and your business has a poor financial situation after the 24-week period, then you are allowed to lay off employees. These employees will qualify for unemployment benefits.

When is the last day for PPP forgiveness?

As long as you rehired all those employees (or an equivalent number) by December 31, 2020, then they will be included in your FTE count for your forgiveness period. However, with respect to a PPP loan made on or after December 27, 2020, the deadline for restoring FTEs is the last day of your Covered Period for that PPP loan.

How much to pay for PPP loan forgiveness?

That’s the minimum you’ll need to spend on payroll over the next 8 to 24 weeks to be eligible for full forgiveness. For example: if your loan is for $50,000, you’ll need to pay at least $30,000 to your employees. Your number of FTE employees. Each employee’s average monthly salary or wage.