PPP Loan Forgiveness Update

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Paul Neiffer with the firm, CliftonLarsonAllen, posted an article to AgWeb today that focused on forginess options for PPP loans. Here are the key takeaways from recent CARES Act PPP provision updates:

  • You have 24 weeks (rather than 8) to spend PPP funds on labor, interest, rents and utilities.
  • If you spend all of the PPP loan amount on those items (labor, interest, rent and utilities), and have maintained the same level of employee FTEs, then the total amount of your PPP loan should be forgiven. You must spend at least 60% of the loan amount (and can spend up to 100% of the loan amount) on payroll expenses.
  • Forgiven PPP loan is tax-free, but you’ll have to reduce your expenses by the amount of loan forgiveness. However, it seems that there may be a push to allow for a full deduction of expenses, which would allow for a net tax benefit. Stay tuned….
  • Neiffer outlines requirements for different types of farm operations (Schedule F farms with and without employees, partnerships, corporations, etc.)  Bottom line, it is likely that most farmers will receive full forgiveness on their PPP loans. However, for many of you, it will require you to write a check to yourselves. Don’t forget to do that!

Neiffer is author of the blog, The Farm CPA.