The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. It also included conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that were unable to obtain loans last year.
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 of 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 updated forms.”
First Draw PPP Conditions for loan forgiveness
Latest On Student Loan Forgiveness – For those who qualify, First Draw PPP loans can be eligible to be forgiven. This happens if the loan disbursement occurs within an 8– to 24 week period.
- The same goes for the compensation and employees.
- The proceeds of the loan can be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is repaid within an 8– to 24 week period.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds go to payroll costs
- How to request loan forgiveness and the time to apply
When all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers can request forgiveness at any point up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.