The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued more updated forms.”
First Draw PPP Loan forgiveness terms
Is The PPP Loan Forgiveness Application Available – For eligible borrowers First Draw PPP loans are eligible to forgive loans. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- The same goes for the employee compensation and the.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible customers are qualified for loan forgiveness when the loan is paid within an 8– 24-week period.
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of the proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness and when
Once all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers may apply for forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 months of the end of the time period that was covered, then PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.