The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding for small-scale businesses who needed loans. This money was 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 signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, specifically 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 the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
Terms for forgiveness for the initial draw of PPP loans
Kpa Group Student Loan Forgiveness – First Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24 week period that follows loan disbursement:
- This is also true for employee compensation and the.
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24 week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The proceeds of the loan could be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness at any time prior 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 must make loan payments to their PPP lender.