Top 3 things to consider when applying for PPP loan forgiveness

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Early on in the pandemic, many dental practice owners may have applied and received money in the form of an Economic Injury Disaster Loan grant from the Small Business Administration. These grants provided owners with up to $10,000 in funds that did not have to be paid back unless they also received loan forgiveness from the agency’s Paycheck Protection Program.

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Mr. Schiff
As dentists begin to make plans to file for forgiveness, the ADA and Academy of Dental Certified Public Accountants are working together to clarify what some may find to be a confusing process. In this Q&A, Allen Schiff, ADCPA president, addresses three key takeaways regarding Paycheck Protection Program loans and provisions related to applying for and receiving forgiveness for these loans. The ADA and ADCPA also will continually update a joint fact sheet with the latest news on all SBA loans for dentists.

What do PPP borrowers who are applying for forgiveness and who also received an Economic Injury Disaster Loan grant need to remember when filing their forgiveness application?

If you received an Economic Injury Disaster Loan grant as well as a PPP loan, the amount of forgiveness you will receive on the PPP loan will be reduced by the amount of your EIDL grant. Please be sure to know how much you received in Economic Injury Disaster Loan grant funds when filing for PPP forgiveness. We also encourage you to keep any document or communication from the SBA that outlines how much you received. This only pertains to the grant and does not pertain to the actual Economic Injury Disaster Loans.

Earlier this year, the IRS said (Notice 2020-32) any expenses paid for with PPP funds that were forgiven would not be eligible for tax deductibility. Does the November guidance (Notices 2020-27 and 2020-51) change anything?

The essence of Notice 2020-32 was to inform PPP loan recipients that the operating expenses paid with the loan would be non-deductible for tax purposes. The new guidance further supports this position. In those November notices, the IRS also clarified that even if you decide to apply for PPP forgiveness in 2021, if you have a “reasonable” expectation that you may receive PPP forgiveness when you do apply next year, you may not deduct those expenses in 2020 either. (In August, the ADA and a coalition of 180 stakeholders wrote to Congress urging lawmakers to address the tax treatment of loan forgiveness under the Paycheck Protection Program. Republicans and Democrats in the House and Senate are also working to overturn this guidance.)

What are your clients reporting about how their PPP lenders are currently treating requests to apply for forgiveness?

Some clients are reporting their lenders are ready for them to submit for PPP loan forgiveness. Other clients are saying their banks are not ready for such submissions. We at the ADCPA are encouraging all of our clients to wait to file for forgiveness since we are still waiting on the Small Business Administration and the Department of Treasury for further guidance. Please keep in mind it is OK to wait, but once your 24-week period has expired, you must file within 10 months in order to obtain PPP loan forgiveness.

The ADA continues to advocate for easing the process for forgiveness, additional PPP loans for eligible businesses, clarification of business expense deductibility related to PPP loans and numerous other issues related to COVID-19 relief programs.

The ADA strongly supports legislation to streamline forgiveness for PPP loans, particularly the Paycheck Protection Program Small Business Forgiveness Act, which calls for loans less than $150,000 to be forgiven. Earlier this year, the ADA signed onto a coalition letter that estimated Paycheck Protection Program loans under $150,000 accounted for 86% of the total recipients of the loans, but less than 27% of Paycheck Protection Program loan dollars overall.

For more information about the ADA’s advocacy efforts during COVID-19, visit

Note: The information in this piece is not intended to be, nor should it be construed as, tax, accounting or legal advice. Readers are urged to consult a qualified professional when seeking such advice. The ADA makes no endorsement of the above advice, nor of any website or organization mentioned in the above piece.