The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the current stimulus law.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”
Forgiveness terms for the initial draw of PPP loans
PPP 1 Loan Forgiveness Application – For those who qualify, First Draw PPP loans are eligible to forgive loans. This applies when the loan payment is made within an 8 to 24 week period.
- It’s the same for compensation and employees.
- The loan proceeds can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week duration following the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds can be used to pay payroll costs or other eligible expenses.
- At least 60% of profits go towards the cost of payroll
- How to apply for loan forgiveness and when
Once all of the loan funds have been utilized The borrower may apply to be forgiven. Borrowers can request forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the last day of the time period that was covered and the loan is not renewed, PPP loan payments can not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.
Download PPP 1 Loan Forgiveness Application
Gallery of PPP 1 Loan Forgiveness Application
