The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that were unable to obtain loans in the past.
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 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released additional updated forms.”
First Draw PPP Loan forgiveness terms
End To Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be eligible to forgive loans. This applies when the loan is disbursed within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained
- The proceeds of the loan can be used to cover expenses for payroll or other eligible expenses.
- At least 60% of funds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is repaid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan funds could be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds go to payroll costs
- When and how do I apply for loan forgiveness?
After all loan funds have been utilized The borrower may apply to be granted forgiveness. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 years of the date of expiration of the time period that was covered the PPP loans are no longer deferred and borrowers will begin making payment to their PPP lender.