The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and provided $284 billion of funding to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”
Forgiveness terms for the first draw of PPP loans
Federal Loan Forgiveness For Nurses – For borrowers who are eligible, First Draw PPP loans can be suitable to forgive loans. This is when the loan payment is made within an 8 to 24-week period.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week duration following the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan funds can be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds are used for the cost of payroll
- How do I apply for loan forgiveness and the time to apply
Once all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months of the end of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers must make loan payments to their PPP lender.