The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was adopted to make the application process for forgiveness, along with conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses who had trouble getting 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 PPP form, which is one page long, for loan forgiveness within 24 days from 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 released updated forms.”
First Draw PPP Conditions for loan forgiveness
Lpc Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24-week period after the loan’s disbursement
- The same goes for the compensation and employees.
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan funds could be used to pay for expenses for payroll or other eligible expenses.
- Minimum 60% of proceeds go to payroll costs
- What is the best time to apply for loan forgiveness
Once all of the loan funds have been utilized, a borrower can apply for forgiveness. Borrowers can request forgiveness at any point up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are eligible to receive loan payments from their PPP lender.
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