The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours after the legislation was adopted to make the process of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Republicans Student Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24 week period that follows the disbursement of loan:
- Employee and compensation levels are kept at a constant level.
- The proceeds from the loan may be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8– 24 week period.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of profits are used to pay for payroll expenses
- How to apply for loan forgiveness , and when
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered the PPP loan payments can no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.