The U.S. Small Business Administration has issued a one-page form 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 current stimulus law.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The legislation required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions that would encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Loan forgiveness terms
Loan Forgiveness Plan – For those who qualify First Draw PPP loans can be suitable to forgive loans. This is when the loan payment is made within an 8– to 24 week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is repaid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan funds could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers can request forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the time period that was covered, then PPP loans are no longer deferred, and borrowers will begin making payment to their PPP lender.
Download Loan Forgiveness Plan
Gallery of Loan Forgiveness Plan
