A Updated Guidance for Employers and Employees Paycheck Protection Program Loan Forgiveness Application 768x593 1

On November 18, the U.S. Treasury Department and Internal Revenue Service (IRS) issued guidance clarifying the deductibility of expenses where a business received a PPP Loan.

The guidance is in relation to the tax treatment of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year in which the loan was received.

This updated guidance states:

“Since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible. This results in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket.

If a business reasonably believes that a PPP loan will be forgiven in the future, expenses related to the loan are not deductible, whether the business has filed for forgiveness or not.  Therefore, we encourage businesses to file for forgiveness as soon as possible.

In the case where a PPP loan was expected to be forgiven, and it is not, businesses will be able to deduct those expenses.”

The issued guidance also states that it aims to treat small businesses fairly and encourages any business that has received a PPP loan file for forgiveness as quickly as possible.


To achieve loan forgiveness, Employers must be diligent about documentation and compliance with the loan guidelines as well as be sure to fill out the Loan Forgiveness Application.

  1. Borrowers should first check with their lender to determine whether the lender has their own form, and what other documents they will need.
  2. Click here for the newly revised PPP Loan Forgiveness Application and instructions.
  3. Complete basic company information on the main Loan Forgiveness Calculation form
  4. Complete Schedule A Worksheet to see if you meet the headcount and pay requirements
  5. Complete Schedule A to find your payroll and compensation costs
  6. Complete the rest of the Loan Forgiveness Calculation Form to determine your total eligible costs and our forgiveness amount
  7. In addition, the SBA also released an “EZ” version of the PPP Loan Forgiveness Application for companies who qualify in any one of these three categories:

i.) Borrowers who are self-employed and do not have employees, and did not use any employee salaries for the computations on the Borrower Application Form, OR

ii.) Borrowers who did not reduce employees’ wages by more than 25% and did not reduce the number of employees or the average paid hours of employees, OR

iii.) Borrowers who experienced reductions in business as a result of government COVID-19 directives regarding sanitation, social distancing, or other safety requirements, but did not reduce employee wages by more than 25%

  1. The lender has up to 60 days to review the application and issue a decision to SBA, and request payment for the forgiven amount. The SBA then has up to 90 days to review the loan application and remit the appropriate forgiveness amount to the lender.

For more information regarding filling out your PPP Loan Application, please contact us: Info@EmployerAdvantage.com | 877.476.9520

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