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Applying for loan forgiveness from the Paycheck Protection Program (PPP) and PPP tax updates

by Megan Roberts, Extension educator (see note)

Farmers' Market Veggies

If you got a Paycheck Protection Program (PPP 1 or PPP 2) loan, now may be time to consider the PPP loan forgiveness process. PPP loan forgiveness is not automatic. You must apply for it with the lender from which you received your loan.

  • The window to apply for PPP loan forgiveness while principal + 1% interest payments are deferred is 10 months after the last day of the maximum 24-week “covered period” for your loan.
  • If you miss the 10-month window, you can still apply for loan forgiveness, but you will begin making payments to your lender until loan forgiveness is approved.
  • Your final opportunity to apply for loan forgiveness is the maturity date of your PPP loan, which is either two or five years depending on the date of your PPP disbursement.

Many of the general details of forgiveness are available at the Small Business Administration's PPP website. To learn more about the PPP loan forgiveness from an agricultural perspective, the University of Minnesota Extension Ag Business Management team and Farmers’ Legal Action Group teamed up for a webinar to walk through: the application process, tax implications, health insurance subsidy implications and other related issues. The webinar was recorded on Thursday, June 10 and is available on YouTube.

The webinar covers:

  • a refresher on PPP 1 & 2, including  Timelines of the PPP loan “covered period” and window to apply for loan forgiveness;
  • an overview PPP loan forgiveness basics, including what is an allowable expense, what the forms look like, and paperwork to retain;
  • a closer look at forgiveness rules, such as tax implications of PPP loan forgiveness and health insurance subsidy implications of PPP loan forgiveness; and
  • the appeals process and discrimination.

State of Minnesota PPP Tax Updates 

Since the webinar was recorded, the Minnesota legislature reached consensus language making PPP loan forgiveness excludable income on the Minnesota 2020 tax return. The 2020 state income tax deadline for individual filing already occurred on May 17 and on that date an adjustment was required via the 2020 M1NC. In the early hours of July 1, the Minnesota legislature reached agreement during their summertime special session and passed the omnibus tax bill (HF9/SF26) into law. The new law officially excludes PPP loan forgiveness from income on the Minnesota tax return for 2020. The Minnesota Department of Revenue announced on July 2 that when possible the PPP adjustment will be made automatically and notification of this automated return will occur via letter. However, in some cases, tax payers may need to amend their returns; the Department of Revenue will notify these taxpayers via letter and the MDR advises that an amended return related to PPP should not be filed prior to receiving this notification.

Webinar sponsors

The webinar was sponsored by Farmers' Legal Action Group, Minnesota Farmers’ Market Association, Minnesota Institute for Sustainable Agriculture, Sustainable Farming Association, Minnesota Farmers Union, Land Stewardship Project, University of Minnesota Extension, and Minnesota NCR-SARE.

Note. Thank you to Jane Jewett, MISA, for organizing the webinar, preparing the news releases, and posting the recording. This blog post is a version of MISA's initial press release. Find the recording plus more information here: https://www.misa.umn.edu/covid-19/grants-cost-share/paycheck-protection-program-2 





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