The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. The legislation required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 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 published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Is Student Loan Debt Going To Be Forgiven – For those who qualify First Draw PPP loans can be qualified to forgive loans. This happens when the loan payment is made within an 8 to 24-week period.
- Employee and compensation levels are ensured
- The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week covered period following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan funds could be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the funds go to payroll costs
- How do I request loan forgiveness and the time to apply
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the end date of the loan will be able to receive loan payments from their PPP lender.