The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the most recent stimulus law.
Congress approved the COVID-19 relief package in the month of March 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 legislation required that the SBA provide simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Conditions for loan forgiveness
How Can My Student Loans Be Forgiven – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week period after the disbursement of loan:
- Employee and compensation levels are kept at a constant level.
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8to 24 week period.
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- At least 60% of profits are used for the cost of payroll
- How to apply for loan forgiveness and when to apply
Once all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the date of maturity. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are able to receive payment from their PPP lender.
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