The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The law required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. Additionally, it included conditions to encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Sallie Mae Loan Forgiveness 2022 – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24-week covered period following the loan’s disbursement
- This is also true for pay and benefits for employees.
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness when the loan is repaid within an 8– to 24 week period.
- Pay and worker levels are maintained in the same way as required for the First Draw PPP loan
- The loan funds could be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How do I request loan forgiveness and when to apply
After all loan funds have been utilized the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender.