Apply For Loan Forgiveness

The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the latest stimulus legislation. 

The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses who had trouble getting loans in the past.

Apply For Loan Forgiveness

“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”

Forgiveness terms in the initial draw of PPP loans

Apply For Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are eligible to forgive loans. This is if the loan disbursement occurs within an 8 to 24 week period.

  • Pay and worker levels are ensured
  • The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
  • A minimum of 60% of the profits are spent on payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is repaid within an 8to 24-week time frame.

  • Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
  • The proceeds of the loan could be used to cover expenses for payroll or other eligible expenses.
  • A minimum of 60% of the funds go to the cost of payroll
  • How and when to apply for loan forgiveness

The borrower is eligible for forgiveness once all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time up to the loan’s maturity date. If they do not file for forgiveness within 10 years of the date of expiration of the period covered, then PPP loans are not deferred any longer, and borrowers must make loan payments to their PPP lender.

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