The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 hours of the legislation being signed into law to simplify the application process for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, particularly for minority-owned companies that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and 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 enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Terms of loan forgiveness
Irs Gov Student Loan Forgiveness – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This is when the loan payment is made within an 8– to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan funds are used on payroll and other eligible expenses; and
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is paid within an 8– to 24 week period.
- 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 the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are spent on payroll costs
- How and when to apply for loan forgiveness
Once all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the last day of the covered period, then PPP loan payments can no longer deferred, and borrowers will begin making payment to their PPP lender.