The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being adopted to make the process of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned businesses that had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Terms of loan forgiveness
Phone Call Student Loan Forgiveness – For those who qualify, First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8 to 24 week period.
- The same goes for the employee compensation and the.
- The loan funds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
- How to request loan forgiveness and when to apply
After all loan proceeds have been used The borrower may apply to be granted forgiveness. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If they do not file for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred, and borrowers will begin making payment to their PPP lender.