Fedloan Gov Loan Forgiveness

Fedloan Gov Loan Forgiveness

The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the most recent stimulus legislation. 

Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within the first 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.

Fedloan Gov Loan Forgiveness

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”

Forgiveness terms for the initial draw of PPP loans

Fedloan Gov Loan Forgiveness – For those who qualify, First Draw PPP loans are qualified for loan forgiveness. This is when the loan payment is made within an 8 to 24 week period.

  • It’s the same for compensation and employees.
  • The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
  • A minimum of 60% of the proceeds go to payroll costs

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week covered period following the loan’s disbursement

  • The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
  • The loan funds are used on payroll costs and other eligible expenses; and
  • At least 60% of the proceeds are used to pay for payroll expenses
  • How and when to apply for loan forgiveness

A borrower can apply for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive the loan payment from their PPP lender.

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