The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. It also included conditions that encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.
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 the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Prosecutor Loan Forgiveness – For eligible borrowers First Draw PPP loans are qualified to be forgiven. This happens if the loan disbursement occurs within an 8– to 24-week timeframe.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds from the loan may be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible customers are eligible for loan forgiveness when the loan is repaid within an 8– to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds could be used to pay expenses for payroll or other eligible expenses.
- At least 60% of proceeds go to payroll costs
- How do I apply for loan forgiveness , and when to apply
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can request forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.