The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses who 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 under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Loan forgiveness terms
Student Loan Debt Forgiveness Taxable Income – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24-week period after loan disbursement:
- The same goes for the employee compensation and the.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week duration following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan proceeds could be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
- How do I apply for loan forgiveness and when to apply
A borrower may apply for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers can request forgiveness at any time up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.