The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The package also mandated 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. It also included conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness by 24 days after the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Loan forgiveness terms
Public Interest Student Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week period.
- The same goes for the employee compensation and the.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness if the loan is paid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exactly the same manner.
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- At least 60% of the proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness
When all of the loan proceeds have been used The borrower may apply to be forgiven. Borrowers may apply for forgiveness at any time until the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the end date of the loan will be able to receive payment from their PPP lender.