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 to comply with the latest stimulus law.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The law requires that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness 8 Week Vs 24 Week – For those who qualify First Draw PPP loans can be qualified to forgive loans. This is when the loan payment is made within an 8 to 24-week period.
- This is also true for compensation and employees.
- The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness if the loan is paid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exact same way.
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
Once all of the loan proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the time period that was covered the PPP loan payments can no longer deferred and borrowers will begin making monthly payments to their PPP lender.