The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. The law requires that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that encourage community banks to make more loans particularly to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of the enactment of 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 additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Paxton Consulting Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be qualified to forgive loans. This applies when the loan is disbursed within an 8– to 24-week period.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is paid within an 8– 24-week period.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are spent on payroll costs
- How do I apply for loan forgiveness , and when
The borrower is eligible for forgiveness after all loan proceeds for which the borrower wants forgiveness have been used. The borrower can request forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are able to receive payment from their PPP lender.