The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The law requires that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions that would 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 wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Can Sallie Mae Loans Be Forgiven – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24-week period after loan disbursement:
- It’s the same for employee compensation and the.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness if the loan is paid within an 8– to 24 week time frame.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
A borrower may apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been used. The borrower can request forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are eligible to receive loan payments from their PPP lender.