The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the latest stimulus law.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the application process for forgiveness. It also included conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 hours of 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 the updated forms.”
First Draw PPP Terms of loan forgiveness
Is Sba Loan Forgivable – For those who qualify First Draw PPP loans can be suitable to forgive loans. This applies when the loan is disbursed within an 8 to 24 week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll costs and other eligible expenses; and
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
- How do I apply for loan forgiveness , and when
A borrower may apply for forgiveness after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the last day of the period covered the PPP loan payments can no longer deferred and borrowers must make loan payments to their PPP lender.