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 latest stimulus law.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in funding for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned companies that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 hours from the date of the enactment of 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.”
First Draw PPP Terms of loan forgiveness
Social Service Loan Forgiveness Program – First Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24 week period that follows the loan’s disbursement
- The same goes for the employee compensation and the.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- Minimum 60% of funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week time period after the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- At least 60% of profits go towards expenses for payroll
- How and when to apply for loan forgiveness?
Once all of the loan funds have been utilized the borrower is eligible for forgiveness. The borrower can request forgiveness anytime up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are able to receive the loan payment from their PPP lender.