The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the current stimulus law.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the bill being signed into law to simplify the application process for forgiveness. It also included conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Apply For Student Loan Forgiveness – For eligible borrowers First Draw PPP loans can be suitable to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness when the loan is paid within an 8to 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan proceeds could be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
- How to request loan forgiveness and the time to apply
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are able to receive the loan payment from their PPP lender.