Obama Loan Forgiveness Program

The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the current stimulus legislation. 

Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. The law required that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans in the past.

Obama Loan Forgiveness Program

“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness within 24 days of 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 published updated forms.”

Forgiveness terms for the initial draw of PPP loans

Obama Loan Forgiveness Program – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24-week covered period following loan disbursement:

  • 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.
  • A minimum of 60% of profits are used for the cost of payroll

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week covered period following loan disbursement:

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

The borrower is eligible for forgiveness once the loan’s proceeds for which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 months after the end of the covered period and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers will begin making loan payments to their PPP lender.

Download Obama Loan Forgiveness Program

Gallery of Obama Loan Forgiveness Program

Leave a Comment