The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the current stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus outbreak. The law requires that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions to encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
Biden Student Loan Forgiveness Plan – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week covered period following the loan’s disbursement
- It’s the same for employee compensation and the.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is paid within an 8to 24-week time frame.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of the proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.