The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the latest stimulus law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. The law required that the SBA issue simplified forms within 24 hours of the signing into law. This was to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.
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 the first 24 hours from the date of enactment under 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 that were updated.”
First Draw PPP Terms of loan forgiveness
Donald Trump Public Service Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are eligible for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week period.
- It’s the same for pay and benefits for employees.
- The loan proceeds can be used to pay payroll costs or other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible customers are qualified for loan forgiveness when the loan is repaid within an 8- 24 week period.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds could be used to cover payroll costs or other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness
A borrower can apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. The borrower can request forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.