Loan Forgiveness After 10 Years

The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that meet the requirements of the latest stimulus legislation. 

The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned companies that struggled to get loans in the past.

Loan Forgiveness After 10 Years

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

Forgiveness terms for the first draw of PPP loans

Loan Forgiveness After 10 Years – For borrowers who are eligible, First Draw PPP loans are eligible to be forgiven. This applies when the loan payment is made within an 8 to 24 week period.

  • It’s the same for pay and benefits for employees.
  • The proceeds from the loan may be used to cover the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of the profits are spent on payroll costs

Second Draw PPP Terms of Loan Forgiveness

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

  • The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
  • The loan proceeds can be used to pay payroll costs or other eligible expenses.
  • A minimum of 60% of the funds go to payroll costs
  • How to apply for loan forgiveness and the time to apply

A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan are eligible to receive loan payments from their PPP lender.

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