The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that 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 requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of 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 released new forms.”
First Draw PPP Conditions for loan forgiveness
Child Care Provider Loan Forgiveness Program – For those who qualify, First Draw PPP loans can be eligible to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week period.
- The same goes for the employee compensation and the.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8– to 24 week period.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness
After all loan’s proceeds have been used the borrower is eligible for forgiveness. Borrowers can request forgiveness at any point up to the date at which the loan matures. If they do not file for forgiveness within 10 years of the last day of the period covered and the loan is not renewed, PPP loan payments can not deferred any longer, and the borrower will be required to make payment to their PPP lender.