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 current stimulus law.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned businesses that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said 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 released updated forms.”
First Draw PPP Terms of loan forgiveness
Is Student Loan Forgiveness Due To Disability Taxable – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8- to 24-week covered period following the loan’s disbursement
- Pay and worker levels are ensured
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same manner 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
- How and when to apply for loan forgiveness?
When all of the loan proceeds have been used The borrower may apply to be forgiven. Borrowers can request forgiveness at any time until the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months 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.