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 to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness For Disabled Veterans Spouse – First Draw PPP loans granted 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 for payroll costs or other expenses that are eligible.
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8- to 24 week period.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds could be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of proceeds go to the cost of payroll
- How to apply for loan forgiveness , and when to apply
A borrower can apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any time up to the date of maturity. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.