The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. The law requires that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that encourage community banks to lend more particularly to minority-owned businesses that had difficulty 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 hours from the date of enactment under 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 new forms.”
Forgiveness terms for the first draw of PPP loans
How Can Your Student Loans Be Forgiven – For borrowers who are eligible, First Draw PPP loans can be eligible for loan forgiveness. This happens when the loan payment is made within an 8– to 24-week timeframe.
- This is also true for compensation and employees.
- The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week duration following the loan’s disbursement
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan could be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of profits are used for the cost of payroll
- How do I request loan forgiveness and the time to apply
When all of the loan’s proceeds have been used The borrower may apply to be forgiven. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.