August 10, 2020

MSCI Continues Support For Small Business COVID Loan Program

As Connecting the Dots readers are aware, proceeds from the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP) loans are not to be taxable, but a ruling has said otherwise-deductible expenses that are paid for with a forgiven PPP loan would not be deductible.

That guidance effectively reversed the congressional intent that PPP loans would not be subject to tax. The U.S. House has passed a provision reversing the IRS ruling, and Sen. John Cornyn (R-Texas) has introduced legislation in the Senate to accomplish the same mission.

Unfortunately, U.S. Treasury Secretary Steve Mnuchin opposes this provision.

That’s why, with nearly 200 other organizations, the Metals Service Center Institute sent letter to House and Senate leaders urging that language reversing the IRS rule be included in the next round of COVID-19 relief. Click here to read the letter.

In other PPP news last week, the SBA published an FAQ document on the PPP’s loan forgiveness process. The FAQs provide guidance on a number of issues related to loan forgiveness, including payroll cost calculations and forgivable payroll and nonpayroll expenses. The SBA documents advises that PPP borrowers can apply for loan forgiveness directly with the lender that services their PPP loans.

The SBA also has announced that the portal for lenders to submit forgiveness applications to the SBA will go live during the week of August 10, 2020. Stay tuned to Connecting the Dots for more information. Congressional authorization for the PPP expired on August 8, 2020. As a result, the SBA is no longer able to process any new PPP applications.