The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to reduce the economic burden of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more 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 said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 days of the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Terms of loan forgiveness
Democrats Student Loan Forgiveness – For those who qualify, First Draw PPP loans are qualified to be forgiven. This happens if the loan disbursement occurs within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are maintained
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan repayment if the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The proceeds of the loan could be used to cover payroll costs or other eligible expenses.
- At least 60% of proceeds go to expenses for payroll
- How and when to apply for loan forgiveness?
When all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can request forgiveness at any time up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive loan payments from their PPP lender.