The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus law.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”
Terms for forgiveness for the initial draw of PPP loans
New Loan Forgiveness Program 2022 – For borrowers who are eligible First Draw PPP loans are suitable to forgive loans. This is when the loan is disbursed within an 8 to 24-week period.
- Employee and compensation levels are ensured
- The proceeds of the loan can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24 week time period after loan disbursement:
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness , and when to apply
When all of the loan funds have been utilized the borrower is eligible to be granted forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the covered period, then PPP loan payments can no longer deferred and the borrower will be required to make payment to their PPP lender.
Download New Loan Forgiveness Program 2022
Gallery of New Loan Forgiveness Program 2022
