The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The law required that the SBA issue simplified forms within the first 24 hours of the 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 were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
Sallie Mae Lawsuit Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8-to 24-week covered period following the disbursement of loan:
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24 week time period after loan payment:
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- How to apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the time period that was covered, then PPP loan payments are not deferred any longer, and borrowers must make payment to their PPP lender.