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Waiting for the Bank’s Approval on your PPP Loan? Here’s What You Should Know

April 28, 2020

Wondering if you can benefit from both the PPP and payroll tax deferral program? While you wait for your PPP application to be approved, you can continue to defer payroll taxes. Here’s what you need to know.

So, you timely got your PPP loan application uploaded to your bank. You have answered all of their questions, provided additional supporting documentation, most of which the bank, not the SBA, requested, now you wait, and wait…

Hopefully you have read our blog about what to do after you have applied for your PPP loan.

While you wait for your loan application to be reviewed…here’s what you need to know.

PPP loan or payroll tax deferral program?

As you have now been working from home for almost five weeks, reading up on the PPP and payroll tax deferral program, you may be wondering if you should have gone with one over the other. You may have read some communications and understood that if you obtain a PPP loan, you are not eligible for the payroll tax deferral program.

You can benefit from BOTH programs

Well, it’s a new day and the IRS, with new FAQs about this issue, has shed more light on the ability to use BOTH programs.

If you have applied for, been approved for or have received the actual funds, employers can continue to defer payroll taxes up until the day they obtain a forgiveness decision from your lender.

What does this mean in the real world?

If you don’t have your PPP money yet, let alone a determination of forgiveness…what should you do?

So, let’s say your funding comes in next week, Monday, April 20th. You have the next eight weeks to spend it. That brings you to June 15th. You have 90 days to submit the loan forgiveness application and then the lender has another 60 days to approve it. That’s 150 days! When all is said and done, that brings you to say the middle of November until you have to cease deferring the payroll tax payments.

After the loan forgiveness determination date, you will have to revert to depositing payroll tax withholdings timely.

But you have been able to defer the employer FICA taxes from now to the middle of November. What you deferred is paid back, without interest and penalties, in two tranches, 50% by December 31, 2021 and the balance by December 31, 2022.

So while you are waiting for the “money to hit your account,” consider deferring the employer FICA taxes. Check out our blog, How does the CARES Act Impact Tax Deferral and Credit Programs?

The CARES Act, PPP, and Payroll Tax deferral are all complicated and changing every day. New guidelines may be issued that will change this information. Be sure to check back in to the Coronavirus Resource Center for the latest updates.

Navigating through all of the information and programs available to impacted businesses may be overwhelming. KLR advisors are available to assist you navigate the best path forward during this unprecedented crisis. With a completely remote workforce our advisors are always available.

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