The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus outbreak. The law requires that the SBA issue simplified forms within 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours of 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 published updated forms.”
Forgiveness terms in the first draw of PPP loans
Federal Public Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be qualified to be forgiven. This is when the loan payment is made within an 8– to 24-week timeframe.
- The same goes for the employee compensation and the.
- The loan proceeds can be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week time period after loan payment:
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to expenses for payroll
- How to apply for loan forgiveness , and when to apply
After all loan proceeds have been used, a borrower can apply to be forgiven. Borrowers can request forgiveness at any time until the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the end of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers will begin making payment to their PPP lender.
Download Federal Public Loan Forgiveness
Gallery of Federal Public Loan Forgiveness
