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 also contains newly updated forms that are in line with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus outbreak. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
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 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
Terms for forgiveness for the first draw of PPP loans
Loan Forgiveness For Non Profit Form – For borrowers who are eligible, First Draw PPP loans can be suitable for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are ensured
- The proceeds of the loan can be used to pay for payroll costs or other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8to 24-week period.
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of profits are used to pay for payroll expenses
- How to request loan forgiveness and the time to apply
Once all of the loan funds have been utilized The borrower may apply to be forgiven. The borrower can apply for forgiveness at any point up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.