The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was 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 had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Conditions for loan forgiveness
Non Profit Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are suitable to be forgiven. This is when the loan is disbursed within an 8 to 24-week period.
- The levels of compensation and employee pay are ensured
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8to 24 week period.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- At least 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the end of the covered period the PPP loans are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.