Many recipients of PPP funds forget that the PPP must be forgiven otherwise is becomes a loan and has to be paid back.

You have 24 weeks from the day the funds were deposited in your account to spend the funds and submit your request for forgiveness.

Don’t forget that if you received two PPP amounts, you will be required to obtain forgiveness on each round of funding separately.

Kallas is winding up forgiveness procedures on the first round and will be contacting you regarding the second round in July.

Forgiveness must be obtained before Kallas can determine your ERTC credit.  And the ERTC credit must be determined before you file your year-end taxes.  The ERTC is available for 2020 and for 2021 so both years will be affected.  It is a sequence of events.  1)  Obtain forgiveness for the money received 2020.  2)  Calculate the ERTC credit for 2020.  3)  File the 2020 year-end tax return with the changes.  Repeat the process for round 2 in 2021.

Some recipients of PPP have attempted to file for forgiveness themselves.  But there are several considerations you should take into account before you submit your forgiveness application.

• You have 24 weeks to spend the PPP money.
• The IRS considers it forgiven in 2020 even if it is forgiven in 2021.
• You must notify your tax preparer if you do it yourself.
• The forms have changed and more guidance is expected.
• The SBA has still not revised its Questions and Answers publication to account for the new rules issued in December.
• As of the date of this writing, some lenders are not ready to receive and review applications for forgiveness.
• You may need more time to strengthen your documentation.
• If you are denied forgiveness on the first PPP loan because you did not use the funds properly you may be denied on the second PPP.
• To obtain the maximum ERTC credit, you want to spend the full 40 percent of second round of PPP money on non-payroll expenses. You may need the full 24 weeks to do this.
• To obtain the maximum ERTC credit, you want to wait until after July 1, 2021 to fund payroll. (But you must be careful not to exceed the 24 week window)
• If Kallas is preparing your forgiveness, we are adjusting the numbers to maximize your ERTC credit.

If you know a fellow restaurateur who is having problems applying for PPP monies, PPP Forgiveness or ERTC credits, have them call Kallas.