The U.S. Small Business Administration released a one-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding to small businesses that needed loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the legislation being signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
First Draw PPP Conditions for loan forgiveness
Department Of Education Loan Forgiveness – For those who qualify, First Draw PPP loans can be eligible to forgive loans. This is when the loan is disbursed within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are ensured
- The loan proceeds can be used to pay for the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8to 24 week period.
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of profits are spent on payroll costs
- How to apply for loan forgiveness , and when
The borrower is eligible for forgiveness once all loan proceeds to which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any time until the loan’s maturity date. If the borrower does not apply for forgiveness within 10 years of the last day of the covered period the PPP loan payments can no longer deferred and the borrower will be required to make monthly payments to their PPP lender.