The U.S. Small Business Administration released a one-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage community banks to lend more specifically to minority-owned companies that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
Forgiveness terms for the first draw of PPP loans
Chances Of Student Loan Forgiveness – For those who qualify, First Draw PPP loans can be suitable to forgive loans. This happens when the loan payment is made within an 8– to 24-week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is paid within an 8– 24-week period.
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan funds could be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness and the time to apply
After all loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.