The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The law requires that the SBA issue simplified forms within 24 hours of the signing into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Forgiveness terms for the first draw of PPP loans
100 Va Disability Student Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8-to 24-week covered period following the disbursement of loan:
- The levels of compensation and employee pay are maintained
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
- What is the best time 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 anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.