The U.S. Small Business Administration has issued a one-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 current stimulus law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions that encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Independent Contractor Ppp Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8-to 24 week period that follows the loan’s disbursement
- It’s the same for employee compensation and the.
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness if the loan is paid within an 8– 24-week time frame.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- A minimum of 60% of the profits go towards payroll costs
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been used. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan will be able to receive the loan payment from their PPP lender.