Ppp Loan Forgiveness Rules

The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus law. 

Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the application process for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.

Ppp Loan Forgiveness Rules

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 days 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 additional updated forms.”

Terms for forgiveness for the initial draw of PPP loans

Ppp Loan Forgiveness Rules – First Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24-week period after the loan’s disbursement

  • This is also true for compensation and employees.
  • The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
  • A minimum of 60% of the profits go towards the cost of payroll

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week time period after loan disbursement:

  • Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
  • The loan proceeds can be used to pay for payroll costs or other eligible expenses.
  • A minimum of 60% of proceeds are used for the cost of payroll
  • How do I apply for loan forgiveness and when to apply

A borrower may apply for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.

Download Ppp Loan Forgiveness Rules

Gallery of Ppp Loan Forgiveness Rules

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