The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the application process for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from 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 published the updated forms.”
First Draw PPP Terms of loan forgiveness
Ppp Loan Forgiveness Expenses Deductible – For eligible borrowers First Draw PPP loans can be eligible for loan forgiveness. This happens when the loan is disbursed within an 8– to 24-week timeframe.
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible customers are qualified 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 the compensation levels are maintained in the exact same way.
- The loan funds could be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive payment from their PPP lender.