The U.S. Small Business Administration released a one-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus epidemic. The law required that the SBA provide simplified forms within the first 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans last year.
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 the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Loan forgiveness terms
Sofi Student Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24-week period after loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds can be used to cover expenses for payroll 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 can be eligible for loan repayment when the loan is repaid within an 8– to 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of profits are spent on payroll costs
- When and how do I apply for loan forgiveness
When all of the loan proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are able to receive payment from their PPP lender.