The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released additional updated forms.”
First Draw PPP Loan forgiveness terms
Abc Student Debt Help Student Loan Forgiveness Program – For borrowers who are eligible, First Draw PPP loans are eligible to forgive loans. This is when the loan is disbursed within an 8– to 24 week period.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds from the loan may be used to pay for expenses for payroll or other expenses that are eligible.
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– 24-week time frame.
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- At least 60% of profits are used to pay for payroll expenses
- How to request loan forgiveness and when to apply
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been used. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If they do not file for forgiveness within 10 months after the last day of the period covered the PPP loans are no longer deferred and borrowers must make monthly payments to their PPP lender.
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