Ppp Loan Program Updates: What You Need To Know About The New Forgiveness Rules

by Rino Abdulah April 05, 2023 Posting Komentar

PPP Loan Rules Update The 4 Changes To Know Before You from valorcpas.com

The Importance of PPP Loans

The Paycheck Protection Program (PPP) was established in 2020 as a part of the CARES Act. The program was created to provide small businesses with forgivable loans to help them weather the economic impact of the COVID-19 pandemic. Since its inception, the PPP loan program has been a lifeline for many small businesses. The loans have helped businesses keep their doors open, pay their employees, and cover other necessary costs.

What Are the New Forgiveness Rules?

As the COVID-19 pandemic continues, the government has made some changes to the PPP loan program. One of the most significant changes is the new forgiveness rules. Under the new rules, borrowers can have their loans forgiven if they use at least 60% of the loan proceeds for payroll costs. The remaining 40% can be used for other eligible expenses, such as rent, utilities, and mortgage interest.

Deadline for Forgiveness Application

Businesses that received PPP loans in 2020 have up to 10 months after the end of their covered period to apply for loan forgiveness. For businesses that received loans in 2021, the deadline is up to 10 months after the end of their covered period or March 31, 2022, whichever comes first.

How to Apply for Forgiveness

To apply for forgiveness, borrowers must submit a forgiveness application to their lender. The application will require documentation to support the use of the loan proceeds, such as payroll records and receipts for eligible expenses.

Changes to Loan Forgiveness for Loans Under $150,000

For loans under $150,000, the Small Business Administration (SBA) has simplified the forgiveness process. Borrowers can use a simplified application that requires fewer documents and less documentation.

What Happens if Forgiveness Is Not Approved?

If a borrower’s forgiveness application is not approved, they will be required to repay the full amount of the loan plus interest. However, borrowers have up to five years to repay the loan, and the interest rate is only 1%.

Conclusion

The PPP loan program has been a critical resource for small businesses during the COVID-19 pandemic. The new forgiveness rules make it easier for borrowers to have their loans forgiven, but it is important to understand the requirements and deadlines. If you have questions about the PPP loan program or the new forgiveness rules, contact your lender or the Small Business Administration for guidance.