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 that are in line with the most recent stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the procedure of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days 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 released new forms.”
First Draw PPP Terms of loan forgiveness
Stafford Loan Forgiveness – For those who qualify, First Draw PPP loans are suitable to forgive loans. This is if the loan disbursement occurs within an 8 to 24 week period.
- This is also true for compensation and employees.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is paid within an 8– 24-week period.
- The levels of compensation and employee pay are maintained in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
- How and when to apply for loan forgiveness?
When all of the loan funds have been utilized, a borrower can apply for forgiveness. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are able to receive payment from their PPP lender.