The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for the forgiveness of 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 plan last month, which included $284 billion of financing for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours after the legislation was adopted to make the process of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans by 24 days after the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Status Of Student Loan Forgiveness – For those who qualify, First Draw PPP loans can be qualified for loan forgiveness. This happens when the loan is disbursed within an 8– to 24 week period.
- The same goes for the employee compensation and the.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible customers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week time frame.
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan funds could be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of the proceeds are used to pay for payroll expenses
- How do I request loan forgiveness and when
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any point up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive the loan payment from their PPP lender.