The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days of the bill being adopted to make the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Forgiveness terms for the first draw of PPP loans
Is The Second Ppp Loan Forgivable – First Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24-week period after the disbursement of loan:
- The same goes for the pay and benefits for employees.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan proceeds could be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the profits are used to pay for payroll expenses
- How and when to apply for loan forgiveness
After all loan proceeds have been used The borrower may apply for forgiveness. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 months after the end of the period covered, then PPP loan payments can not deferred any longer, and the borrower will be required to make payment to their PPP lender.