Loan Forgiveness 2022

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 revised and updated forms to comply with the most recent stimulus legislation. 

The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. It also included conditions that would encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.

Loan Forgiveness 2022

“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP by 24 days after the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released new forms.”

Forgiveness terms in the initial draw of PPP loans

Loan Forgiveness 2022 – For those who qualify, First Draw PPP loans can be qualified to be forgiven. This happens when the loan payment is made within an 8 to 24-week timeframe.

  • Pay and worker levels are ensured
  • The loan proceeds are used on payroll expenses and other expenses that are eligible and
  • A minimum of 60% of the profits are used to pay for payroll expenses

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week time period after loan disbursement:

  • The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
  • The loan funds can be used to pay the cost of payroll as well as other eligible expenses.
  • At least 60% of the proceeds are used for the cost of payroll
  • How do I apply for loan forgiveness , and the time to apply

The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.

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