The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. It also included conditions to encourage banks in the community to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Terms of loan forgiveness
Short Sale Loan Forgiveness Tax – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24 week period that follows loan disbursement:
- The same goes for the employee compensation and the.
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
Once all of the loan proceeds have been used The borrower may apply to be granted forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 years of the last day of the time period that was covered the PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.