The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet 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 in need of loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Terms of loan forgiveness
PPP Loan Forgiveness Form Fillable – For eligible borrowers, First Draw PPP loans can be eligible to forgive loans. This is when the loan is disbursed within an 8 to 24 week period.
- This is also true for pay and benefits for employees.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8– to 24 week time frame.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of the profits are spent on payroll costs
- How do I request loan forgiveness and when to apply
Once all of the loan funds have been utilized The borrower may apply for forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 years of the end of the time period that was covered, then PPP loan payments can not deferred any longer, and borrowers must make monthly payments to their PPP lender.