Chamber advocates to ensure PPP loan recipients are provided the full benefits intended in the CARES Act

Your San Antonio Chamber sent a letter to the Bexar County Congressional members requesting that Paycheck Protection Program (PPP) loan recipients are provided the full benefits intended in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Your Chamber has witnessed first-hand the devastating impact of COVID-19 on our local economy. One of the most effective economic relief measures for our members was the PPP, passed as part of the CARES Act.

The terms of the PPP were simple: if qualifying small businesses use a federally guaranteed loan to pay their employees and cover certain non-payroll expenses, the loan will be forgiven. Included in the CARES Act was a provision stating that any portion of a PPP loan that qualified for loan forgiveness “shall be excluded from gross income” for tax purposes. However, despite Congress’s clear intent, the Internal Revenue Service (IRS) issued Notice 2020-32, which specified that “no deduction is allowed under the Internal Revenue Code…if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the [CARES Act].”

The effect of this IRS ruling is to transform tax-free loan forgiveness into taxable income, which essentially hits small businesses with an unexpected tax increase of up to 37% when they file their taxes for 2020. If Congress fails to act by the end of the year, thousands of our small businesses kept afloat with PPP loans could be forced to shut their doors permanently,  because instead of 100% of PPP funds going to payroll, rent, utility payments, and mortgage interest, up to 37% will go to the IRS instead.

For more information, please contact Stephanie Reyes, VP of Public Policy at or by phone at 210-229-2162.

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