The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in funding to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. The law required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. It also included conditions that encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 days from 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 released more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Are Private Student Loans Eligible For Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24-week period after the disbursement of loan:
- It’s the same for pay and benefits for employees.
- The proceeds of the loan can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of profits go towards payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the funds go to expenses for payroll
- How and when to apply for loan forgiveness?
When all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.