The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to simplify the process of applying 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 and wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours 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 published new forms.”
Terms for forgiveness for the first draw of PPP loans
Did Trump Forgive Student Loans – For eligible borrowers First Draw PPP loans are qualified for loan forgiveness. This happens if the loan disbursement occurs within an 8– to 24 week period.
- This is also true for employee compensation and the.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment if the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan funds are used on payroll and other eligible expenses; and
- A minimum of 60% of the profits go towards expenses for payroll
- How to apply for loan forgiveness and when to apply
A borrower may apply for forgiveness once all loan proceeds for 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 months of the last day of the time period that was covered the PPP loan payments are no longer deferred and borrowers must make loan payments to their PPP lender.