Network 46 Loan Forgiveness

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

The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the signing into law. This is to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.

Network 46 Loan Forgiveness

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of enactment in 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 the updated forms.”

First Draw PPP Conditions for loan forgiveness

Network 46 Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week covered period following the loan’s disbursement

  • This is also true for employee compensation and the.
  • The loan proceeds are spent on payroll and other eligible expenses; and
  • A minimum of 60% of the profits go towards payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week covered period following loan payment:

  • The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
  • The loan proceeds are spent on payroll and other eligible expenses; and
  • A minimum of 60% of the profits are spent on payroll costs
  • How to request loan forgiveness and the time to apply

Once all of the loan proceeds have been used, a borrower can apply to be forgiven. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the end of the time period that was covered the PPP loans are no longer deferred, and borrowers must make loan payments to their PPP lender.

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