New Loan Forgiveness Program

The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus legislation. 

Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that were unable to obtain loans last year.

New Loan Forgiveness Program

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 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 issued additional updated forms.”

Forgiveness terms in the first draw of PPP loans

New Loan Forgiveness Program – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows the disbursement of loan:

  • The levels of compensation and employee pay are maintained
  • The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
  • At least 60% of proceeds go to payroll costs

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week time frame.

  • The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
  • The loan funds can be used to pay for the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of the profits are spent on payroll costs
  • How do I apply for loan forgiveness , and when

The borrower is eligible for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the loan’s maturity date. If they do not file for forgiveness within 10 years of the last day of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred, and borrowers will begin making monthly payments to their PPP lender.

Download New Loan Forgiveness Program

Gallery of New Loan Forgiveness Program

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