The U.S. Small Business Administration released a one-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. The law required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions to encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one-page form for the forgiveness of PPP loans within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”
Terms for forgiveness for the initial draw of PPP loans
State Of Iowa Student Loan Forgiveness – For eligible borrowers First Draw PPP loans are suitable for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.
- It’s the same for pay and benefits for employees.
- The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible customers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to the cost of payroll
- How do I apply for loan forgiveness and when to apply
The borrower is eligible for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can request forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.
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