How Can I Get My Loans Forgiven

How Can I Get My Loans Forgiven

The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the latest stimulus law. 

Congress approved the COVID-19 relief package in the month of March and included $284 billion of financing to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses who struggled to get loans last year.

How Can I Get My Loans Forgiven

“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”

Forgiveness terms for the initial draw of PPP loans

How Can I Get My Loans Forgiven – For those who qualify, First Draw PPP loans are suitable for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.

  • Employee and compensation levels are kept at a constant level.
  • The proceeds from the loan may be used to cover payroll costs or other expenses that are eligible.
  • A minimum of 60% of profits are spent on payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8 24-week time frame.

  • The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exactly the same manner.
  • The loan funds are used on payroll expenses and other eligible expenses; and
  • Minimum 60% of funds go to the cost of payroll
  • How to apply for loan forgiveness , and when

After all loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered, then PPP loan payments are not deferred any longer, and borrowers must make payment to their PPP lender.

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