The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for 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 plan last month, which provided $284 billion of funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. It also included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Forgiveness terms for the initial draw of PPP loans
Student Loan Forgiveness For Disabled Persons – For eligible borrowers, First Draw PPP loans can be qualified to forgive loans. This applies when the loan payment is made within an 8 to 24 week period.
- The same goes for the compensation and employees.
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The loan funds are used on payroll costs and other eligible expenses; and
- Minimum 60% of profits go towards payroll costs
- How do I apply for loan forgiveness and the time to apply
Once all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the date of maturity. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are able to receive loan payments from their PPP lender.