The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within the first 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.”
First Draw PPP Conditions for loan forgiveness
President Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are qualified to forgive loans. This happens when the loan payment is made within an 8 to 24 week period.
- It’s the same for pay and benefits for employees.
- The proceeds of the loan can be used to cover the cost of payroll as well as other expenses that are eligible.
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible customers are eligible for loan forgiveness when the loan is repaid within an 8to 24-week period.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll as well as other eligible expenses and
- Minimum 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 years of the date of expiration of the covered period and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers must make payment to their PPP lender.