Part of our You Belong in Business podcast

Late 2020 tips for business owners on PPP loan forgiveness, taxes, and more—no matter what Congress does next

Updated November 9, 2020

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Historic federal help has generated piles of extra paperwork for business owners like you.

Billions of dollars in Paycheck Protection Program (PPP) loans now require detailed paperwork to apply for crucial loan forgiveness. Meanwhile, businesses wait with bated breath for the results of more stimulus negotiations in Congress.

Mark West, national vice president of business solutions for Principal®, has helped to guide and reassure business owners throughout the pandemic, and has more ideas about how to stay proactive no matter what happens in Washington, D.C.

The challenge: What can businesses do before the end of 2020 to help themselves with PPP loan forgiveness and other business stimulus and strategies?

Here are the highlights in the categories of federal stimulus, taxes, and other business strategies. Listen to the podcast episode (through the player above or on your favorite app) for full details.

These two online tools may be helpful for business owners acting on ideas in the episode:

Federal stimulus

  • The Paycheck Protection Program (PPP): The program closed August 8 after approving more than 5.2 million loans, but businesses are still determining how to spend the money. The U.S. Treasury and Small Business Administration (SBA) in early October announced simplified forgiveness for loans of $50,000 or less. Regardless, keep meticulous records. Make sure you spend at least 60% on payroll to maximize forgiveness. And be ready for the loan forgiveness process to take time.
  • Economic Injury Disaster Loans (EIDL): This can be used with PPP if it covers different expenses—and if your business can document economic injury due to COVID-19. The grants of up to $10,000 initially offered are no longer are available. Application deadlines vary by state and begin to hit around mid-December.
  • Families First Coronavirus Response Act: If you paid employees under the Emergency Family and Medical Leave Expansion Act, you may be able to receive a tax credit for wages paid—but you can’t get forgiveness under the PPP program for these same wages. Deadline is end of year.
  • SBA Express loans: This loan of up to $1 million for as long as seven years requires collateral above $25,000 and proof that other sources of credit aren’t available. These are still available and can be combined with PPP if used for different expenses.
  • Main Street Lending Program: This remains an option for larger and healthier businesses with up to 15,000 employees (or up to $5 billion in 2019 revenue) that can support a minimum (unforgiveable) loan of $100,000. Application deadline is end of year.


  • Carrying back losses: Claim 2020 losses and apply them against your 2019 taxes (probably with an amended return). Or carry 2018, 2019, and 2020 losses back for five years—or forward. Work with your CPA or tax counsel to pinpoint in which year the losses would benefit your business the most.
  • Deferral of employer payroll taxes: Part of the CARES (Coronavirus Aid, Relief, and Economic Security) Act, it was designed help your immediate cash flow. But you then pay half the deferred amount by end of 2021 and the other half by end of 2022.
  • Deferral of employee payroll taxes: An executive order allows you to defer paying employee payroll taxes until early 2021, but you’re still on the hook if the worker leaves in the meantime. This deferral may be viewed by business owners and employees alike as short-term gain for long-term pain.
  • Higher estate tax exemption: This exemption basically doubled in 2017 and now stands at about $11.5 million per individual. If you intend to gift your business to your children, and 2020 has lowered its value, the timing may be right to save taxes.
  • Employee retention credit: If you didn’t take PPP and suffered at least a partial business shutdown, this allows you to claim up to a $5,000 credit (technically 50% of the first $10,000) on the wages of each employee.

Other business strategies

  • 401(k)/retirement savings: You have until the last day of the fiscal year to establish a qualified retirement plan—generally a better fit for a healthier business. Contributions for the participants are tax deductible—which could help a company generate revenue. Businesses not ready for that investment could try a SEP IRA plan.
  • CARES Act coronavirus-related distribution: A plan participant diagnosed with COVID-19 or who has lost pay can withdraw up to $100,000—penalty free—from an IRA or qualified plan, even under age 59 ½. You can repay it or spread the taxes over three years.
  • Selling the business: Consider the evergreen option under Code Section 1202 if you’re a C corporation and have held stock for more than five years with no more than a $50 million original investment. This strategy could eliminate capital gains on at least $10 million profit in the sale. Or you could sell to a key employee, family member, competitor or other third party, or to an Employee Stock Ownership (ESOP) plan. The important thing is that the timing is right for you. What if the economy surges in a year or two, providing a more favorable economy to sell?

No matter which strategies best fit your business, West says to consider all the perseverance and ingenuity we’ve seen this year as business owners have coped through shutdowns, remote work, and all the other hurdles.

“Take the time to step back and appreciate how much has been accomplished,” he says. “It’s been a challenging year, and if we’ve ever seen resilience out of business owners, it’s been this year.”

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This podcast provides educational information only with the understanding that Principal® and its employees are not offering legal, accounting, investment or tax advice. Business owners should consult with their counsel or other advisors when making business decisions.

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