The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage community banks to lend more particularly to minority-owned businesses 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 PPP form, which is one page long, for 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 issued new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
How Do You Apply For Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be eligible to forgive loans. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are maintained
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan proceeds are spent on payroll and other eligible expenses; and
- Minimum 60% of profits go towards expenses for payroll
- How do I apply for loan forgiveness , and when to apply
After all loan proceeds have been used the borrower is eligible for forgiveness. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive the loan payment from their PPP lender.