The new question on everyone’s mind is 8 weeks vs 24 weeks…
Many kinds of organizations and companies accessed PPP (Paycheck Protection Program) loans from the SBA (Small Business Administration). Here are the important questions to consider while determining whether to apply for forgiveness after 24 weeks, versus the original 8 week deadline:
1. Have you spent all of the money from the loan on forgivable expenses within the 8 week deadline? If not, will you be able to spend it all on forgivable expenses within 24 weeks?
Explanation: Maximizing your likelihood for complete loan forgiveness is the highest priority when considering which deadline to use when applying for forgiveness. If you could use more time to spend more money on forgivable expenses, use it!
2. How many Full-Time Employees (FTE) did you have when applying for the PPP loan, versus how many FTEs or equivalent FTEs will you have at the time you ask for forgiveness? Will you have the same number of FTEs at the end of 8 weeks as you would at the end of 24 weeks, or might that number increase or decrease?
Explanation: To receive the maximum possible debt forgiveness, you must have at least the same number of FTEs when applying for forgiveness as you did when you applied for the PPP loan initially. Otherwise, you may not be forgiven for the full loan.
3. Would you be able to get the entirety of your PPP loan forgiven prior to the end of your organization’s fiscal year if submitting an application for forgiveness sooner rather than later?
Explanation: If so, this would enable you to prepare your tax return without reporting the PPP loan.
Your answers to the above questions should clarify which forgiveness timeframe works best for your organization. If you still have questions or concerns, we recommend reaching out to your CPA to help you make the most informed decision possible.
Need help choosing a trustworthy CPA? Let us know at clientsupport@benevolentvision.com and we’d love to connect you with one of the trusted professionals in our network!
Benevolent Vision offers Nonprofit Advisory, Facilitation and Management Services which can be customized to meet the unique needs of your organization.
