The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month, which offered $284 billion in funding to small businesses that needed loans. This money was used to reduce the economic burden of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the legislation being adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days from the date of enactment in 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 new forms.”
First Draw PPP Terms of loan forgiveness
Navient Settlement Student Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following the loan’s disbursement
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment if the loan is paid within an 8– to 24 week time frame.
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- At least 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness and when
A borrower may apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the last day of the time period that was covered and the loan is not renewed, PPP loan payments can not deferred any longer, and borrowers will begin making loan payments to their PPP lender.