The U.S. Small Business Administration has released a form of one page which makes it simpler to request 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 and offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned companies that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours from 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 updated forms.”
First Draw PPP Conditions for loan forgiveness
Is There A New Student Loan Forgiveness Program – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness during the 8- to 24 week period that follows loan disbursement:
- Pay and worker levels are maintained
- The proceeds from the loan may be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible customers are qualified for loan forgiveness when the loan is paid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the profits are spent on payroll costs
- How and when to apply for loan forgiveness
When all of the loan’s proceeds have been used, a borrower can apply for forgiveness. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the period covered, then PPP loan payments are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.