The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The legislation required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Osla Student Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24-week period after loan disbursement:
- This is also true for employee compensation and the.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week covered period following loan payment:
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll expenses as well as other eligible expenses and
- At least 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
Once all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any time until the loan’s maturity date. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.