The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus epidemic. The legislation required 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 encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from 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 new forms.”
Terms for forgiveness for the initial draw of PPP loans
Student Loan Forgiveness Biden – For borrowers who are eligible First Draw PPP loans can be eligible to forgive loans. This is if the loan disbursement occurs within an 8– to 24-week timeframe.
- It’s the same for compensation and employees.
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment when the loan is repaid within an 8– to 24 week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits are used for the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
After all loan proceeds have been used The borrower may apply to be forgiven. The borrower can request forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the period covered the PPP loans are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.