How To Qualify For Ppp Loan Forgiveness

How To Qualify For Ppp Loan Forgiveness

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

The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The law required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. It also included conditions that would encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans last year.

How To Qualify For Ppp Loan Forgiveness

“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP within 24 days of the date of 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 issued new forms.”

Forgiveness terms in the initial draw of PPP loans

How To Qualify For Ppp Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are eligible to forgive loans. This happens when the loan payment is made within an 8 to 24-week period.

  • Pay and worker levels are ensured
  • The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
  • At least 60% of profits go towards payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is repaid within an 8 24-week period.

  • Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
  • The loan proceeds could be used to pay the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of the proceeds go to expenses for payroll
  • How to request loan forgiveness and the time to apply

Once all of the loan proceeds have been used The borrower may apply to be forgiven. The borrower can request forgiveness at any time prior to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.

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