The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them cope with the economic fallout of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the procedure of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment under 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 new forms that were updated.”
First Draw PPP Terms of loan forgiveness
1099 Form For Loan Forgiveness – For eligible borrowers, First Draw PPP loans are eligible to forgive loans. This is when the loan is disbursed within an 8 to 24-week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- At least 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 once the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.