The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days 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 issued more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Fiu Student Loan Forgiveness – For those who qualify, First Draw PPP loans are suitable to forgive loans. This applies when the loan is disbursed within an 8 to 24-week timeframe.
- Employee and compensation levels are kept at a constant level.
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- Minimum 60% of profits go towards payroll costs
- When and how do I apply for loan forgiveness?
Once all of the loan funds have been utilized the borrower is eligible for forgiveness. The borrower can apply for forgiveness at any point up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the end date of the loan are able to receive payment from their PPP lender.