PPP – Should I apply for forgiveness?

So in the last few weeks since the SBA opened the portal for banks to submit for PPP loan forgiveness I have had questions from just about every client, and many prospects, all with the same question…”Should we apply for PPP loan forgiveness?”. My simply answer is NO. Here are the reasons why.

  • The process has not been fully vetted yet.
    • As banks work through the kinks of applying for forgiveness, a learning curve needs to happen. I don’t think you want to be the test case.


  • Automatic forgiveness
    • Rumors still abound that congress will pass a law to provide automatic forgiveness for loans under a certain threshold, the banking community are pushing this had. Over 5 million loans were approved and funded…many banks, especially smaller banks will be unable to handle the crush of approvals and the timeline required for providing an answer on forgiveness. I have heard and read that the threshold could be as low as $150,000 or as high as $250,000.


  • Tax implications
    • Yes, I hate to remind everyone that this is going to be taxable in some way shape or form. Removing the expense, while a wash from a net income standpoint, is an important item to remember. While you should always check with your tax provider, in my opinion, if the loan is not forgiven in 2020, then those expenses are deductible in 2020. Losses on your taxes carry forward, so while it may appear as “revenue” in 2021, it’s always better to kick the tax can down the road.


  • Focusing on your business
    • The process for forgiveness can appear daunting. As we still work on recovery, time better spent is time spent focusing on your business. Now is the time to be working on plans for 2021. Take the time to really “look and understand” your business and what drives both top line revenue, and what levers can you pull to affect expenses that drive the bottom line. What will the upcoming flu season bring with it? Will we have more government shutdowns?

A Fractional CFO can help you with making the decision as to whether to apply for forgiveness, as well as wok through the paperwork and documentation process. Also, as I mentioned, now is the time to plan for 2021. Let A Fractional CFO work with you to develop and vet a solid plan so that you can have a successful 2021.

I am offering a free business Health Check to new prospects, please reach out today for more information.  Here is a link to my calendar to pick a meeting time and type that works for your schedule.  Need an early morning, evening or weekend…contact me at tfremarek@afractionalcfo.com.