The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The law requires that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
Forgiveness terms in the first draw of PPP loans
Biden Forgives Student Loans – For those who qualify, First Draw PPP loans are qualified to forgive loans. This happens when the loan is disbursed within an 8 to 24 week period.
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment if the loan is paid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds go to the cost of payroll
- When and how do I apply for loan forgiveness
A borrower may apply for forgiveness only after the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan are able to receive loan payments from their PPP lender.