The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
Forgiveness terms in the first draw of PPP loans
Student Loan Debt Forgiveness 2022 – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8 to 24 week period that follows loan disbursement:
- The levels of compensation and employee pay are ensured
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of funds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan funds could be used to cover the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of profits go towards expenses for payroll
- How do I apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness only after all loan proceeds to 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 they do not file for forgiveness within 10 years of the end of the time period that was covered, then PPP loans are no longer deferred, and borrowers must make monthly payments to their PPP lender.