The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus law.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Loan forgiveness terms
Benefits Of Student Loan Forgiveness – For those who qualify, First Draw PPP loans can be qualified for loan forgiveness. This applies if the loan disbursement occurs within an 8– to 24-week period.
- Pay and worker levels are ensured
- The loan proceeds can be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24 week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds could be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness
After all loan proceeds have been used The borrower may apply to be forgiven. The borrower can request forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the last day of the time period that was covered and the loan is not renewed, PPP loans are no longer deferred, and borrowers must make payment to their PPP lender.