SBA turns focus to PPP loan forgiveness

As business owners and employers work to achieve full forgiveness of their PPP loans, Retirement Plan Division Director Chris Middleton is working with many to deploy federal funding into retirement contributions for full loan forgiveness.

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Frontloading benefits

One potential way for a business to help meet the 75 percent threshold to get full forgiveness is to frontload expenses such as contributions to employees’ 401(k) retirement plans, according to Chris Middleton, executive vice president and director of the retirement plan division at Greenleaf Trust in Kalamazoo.

Department of the Treasury and SBA guidelines do not preclude frontloading the cost of benefits, Middleton said. He’s been receiving calls from clients who own small businesses, received a PPP loan and are now asking for advice on getting maximum loan forgiveness. Many intend to use employee retirement accounts to get PPP forgiveness.

“We have a good percentage of them that are doing this or pursuing doing it,” Middleton said. “Since there was no limit put on how much can be put into employer contributions, many employers are saying, ‘I’m planning on putting the entire employer contribution for the full year into this bucket.’”

However, Internal Revenue Service guidelines issued a month ago prevent employers from deducting those expenses on their federal tax return if they use PPP money for the contribution, Scott said. Since federal money paid those expenses, getting a tax deduction “would be double-dipping,” although Congress could change that as well, he said.