The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the current stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, especially for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
First Draw PPP Terms of loan forgiveness
Iadt Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be suitable to forgive loans. This happens if the loan disbursement occurs within an 8– to 24-week timeframe.
- This is also true for pay and benefits for employees.
- The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week duration following loan disbursement:
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds can be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness only after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any point up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.