The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the current stimulus law.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 days of the bill being approved by the lawmaker to streamline the application process for forgiveness, along with conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days of 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 updated forms.”
First Draw PPP Terms of loan forgiveness
Defrauded Student Loan Forgiveness – For eligible borrowers First Draw PPP loans are eligible for loan forgiveness. This applies when the loan is disbursed within an 8 to 24-week period.
- This is also true for compensation and employees.
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness when the loan is paid within an 8to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the funds go to the cost of payroll
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been used. 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 end of the covered period and the loan is not renewed, PPP loans are no longer deferred, and borrowers must make monthly payments to their PPP lender.