The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The law required that the SBA release 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 that encourage community banks to lend more, especially to minority-owned businesses that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Conditions for loan forgiveness
Congress Student Loan Forgiveness 2022 – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness within the 8-to 24 week period that follows the loan’s disbursement
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exact same way.
- The loan funds can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
After all loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the period covered, then PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender.