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 that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses who had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Former Itt Tech Student Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified to forgive loans. This is when the loan payment is made within an 8– to 24 week period.
- This is also true for compensation and employees.
- The proceeds of the loan can be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness if the loan is paid within an 8to 24-week time frame.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds could be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness and when to apply
Once all of the loan’s proceeds have been used The borrower may apply to be forgiven. Borrowers can request forgiveness at any point up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the last day of the period covered, then PPP loans are no longer deferred and borrowers must make monthly payments to their PPP lender.