The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was to facilitate the application for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain 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 one-page form for PPP loan forgiveness within 24 days from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Conditions for loan forgiveness
Pellissippi State Former Student Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week covered period following the disbursement of loan:
- This is also true for compensation and employees.
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week covered period following loan payment:
- Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds can be used to cover the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of profits go towards payroll costs
- How do I request loan forgiveness and the time to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the date of maturity. If borrowers do not apply for forgiveness within 10 years of the end of the covered period, then PPP loans are no longer deferred and borrowers will begin making monthly payments to their PPP lender.