The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus law.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 days of the bill being signed into law to simplify the application process for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for 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 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Is Public Service Loan Forgiveness Real – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24 week period that follows the loan’s disbursement
- Pay and worker levels are maintained
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible customers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week period.
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds could be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.