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PPP Loan Forgiveness Terms Made Simple

Thousands of small business owners applied for and received Paycheck Protection Program (PPP) funds. The SBA-backed loans were designed to help businesses keep their workforce employed during the COVID-19 pandemic. Borrowers can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used and at any time up to the maturity date of the loan, providing they adhered to the criteria outlined in the program. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers must begin making loan payments to their PPP lender. Forgiveness terms can be complex to understand and the tax professionals at Orlando, Florida based CPA Accounting & Tax Services outlines the PPP loan forgiveness terms for both the First and Second Draw loans:

  1. First Draw PPP Loan Forgiveness Terms: First Draw PPP loans are eligible for full loan forgiveness if the PPP Loan Forgiveness application is submitted during the 8-24 week covered period following the loan disbursement if all of the following criteria are met:
  • The loan proceeds are spent on payroll costs and other eligible expenses.
  • Employee and compensation levels are maintained.
  • At least 60% of the proceeds were spent on payroll.
  1. Second Draw PPP Loan Forgiveness Terms: Second Draw full PPP loan forgiveness is available to eligible borrowers if the PPP Loan Forgiveness application is submitted during the 8-24 week covered period following loan disbursement if all of  the following criteria are met:
  • The loan proceeds are spent on payroll costs and other eligible expenses.
  • Employee and compensation levels are maintained in the same manner, as was required for the First Draw PPP loan.
  • At least 60% of the proceeds were spent on payroll, as was the case with the First Draw PPP loan.

We can help navigate you through the complexities of the PPP Loan Forgiveness process. Contact the professionals at  CPA Accounting & Tax Services to help guide you through tax season and beyond. We specialize in Business Accounting Services, Individual Tax Services, Tax Preparation, International Tax Services, Tax Planning and Tax Resolution Services. We have offices in Orlando, Florida and service clients worldwide. Find out how we can serve all of your accounting needs by contacting us today:  www.cpaaccounting.biz

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