The Paycheck Protection Program (PPP) is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which consisted of government-backed loans to help small businesses and other eligible applicants continue covering payroll costs and certain operating expenses during the coronavirus (COVID-19) pandemic. These loans were available to:
- Small businesses with less than 500 employees
- Sole proprietorships
- Independent contractors
- Eligible self-employed individuals
Under certain criteria, and if you use the funds as directed by the SBA, the loan may be completely or partially forgiven. Go here to learn about PPP loan forgiveness.
For 1120S, assuming the debt was forgiven, you would answer "yes" to the question on line 12. It does get entered on line 16 of schedule K and the steps you took have allowed you to reconcile your balance sheet.
