The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form 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 published additional updated forms.”
Forgiveness terms in the first draw of PPP loans
Loan Forgiveness California – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if within the 8 to 24-week covered period following loan disbursement:
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay for payroll costs or other expenses that are eligible.
- Minimum 60% of profits go towards the cost of 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– 24 week period.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds could be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
- How do I apply for loan forgiveness and when
After all loan’s proceeds have been used The borrower may apply for forgiveness. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers must make payment to their PPP lender.