The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus epidemic. The legislation required that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 days from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued more updated forms.”
Forgiveness terms for the initial draw of PPP loans
Does Working For A University Qualify For Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are qualified to be forgiven. This is when the loan is disbursed within an 8– to 24-week timeframe.
- It’s the same for employee compensation and the.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week time period after loan payment:
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of funds go to expenses for payroll
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any time until the date at which the loan matures. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive the loan payment from their PPP lender.