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Will I have to pay back the loan?
It’s a possibility. The way the program is set up is different from typical loan programs. The amount you will have to pay back depends on how you use the money you are given. If 75% or more goes towards payroll, you will not have to pay anything back and the loan will be forgiven. However, if that percentage is lower, you will.
What can I count as deductions?
Most expenses related to your business can qualify as tax deductibles, but only if you did not use the PPP loan to pay for it. A few are listed here:
- Rent - ex: an office space
- Utilities - ex: water, internet, electricity, air conditioning/heat, etc.
- Interest tax deductions - ex: mortgages (for business spaces)
- Payroll taxes
What will happen if less than 75% goes towards non-business-related expenses?
This is the case when you will be responsible for paying back the loan. If you find yourself in this position, don’t panic. You will get a six-month deferment. Meaning, you will have six months until you are obligated to start making payments. You will have two years (from the first payment) to pay off the loan completely.
Will there be more opportunities to apply for a PPP loan?
Yes. As we speak, Congress is working hard to try to pass a third stimulus bill. Like the other two, this one will also include a few billion dollars worth of PPP loans. Unfortunately, we cannot say exactly how much will go towards PPP loans until the bill is signed and put into law. President Biden announced that there will be a special period from February 24th, 2021 to March 10th, 2021, where businesses with 20 or fewer employees may apply for PPP loans. This came after the backlash that much of the loan funds went to larger businesses. As of February 4th, 2021, roughly only 26% of funds included in the second stimulus bill have been allocated.
Still have some unanswered questions?
That’s okay. Taxes are confusing, and PPP loans make things even more confusing. We’re here to help you figure this stuff out. Contact us to get all your PPP tax-related questions answered by one of our Tax Professionals.
