The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. It also included conditions that encourage banks in the community 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 stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Ashford University Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be suitable to forgive loans. This applies when the loan payment is made within an 8– to 24-week period.
- This is also true for employee compensation and the.
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week duration following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The proceeds of the loan could be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits go towards the cost of payroll
- When and how do I apply for loan forgiveness?
After all loan’s proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can request forgiveness anytime up to the maturity date 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.