Usda Rural Development Loan Forgiveness

The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the current stimulus legislation. 

Congress approved the COVID-19 relief plan last month, which included $284 billion of financing for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned companies that were unable to obtain loans last year.

Usda Rural Development Loan Forgiveness

“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans by 24 days after the date of the enactment of 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 new forms that were updated.”

First Draw PPP Conditions for loan forgiveness

Usda Rural Development Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24 week period that follows the disbursement of loan:

  • The same goes for the employee compensation and the.
  • The loan funds are used on payroll costs and other expenses that are eligible and
  • Minimum 60% of funds go to expenses for payroll

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is repaid within an 8to 24-week period.

  • Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
  • The proceeds of the loan could be used to cover expenses for payroll or other eligible expenses.
  • At least 60% of profits go towards expenses for payroll
  • How and when to apply for loan forgiveness?

When all of the loan’s proceeds have been used, a borrower can apply to be forgiven. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the last day of the covered period, then PPP loans are no longer deferred and borrowers must make payment to their PPP lender.

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