The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions that encourage community banks to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue 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 the updated forms.”
Forgiveness terms for the first draw of PPP loans
Student Loan Forgiveness For Non Profit Workers – For eligible borrowers, First Draw PPP loans are qualified for loan forgiveness. This happens when the loan is disbursed within an 8– to 24 week period.
- It’s the same for employee compensation and the.
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- A minimum of 60% of proceeds are used for the cost of payroll
- How and when to apply for loan forgiveness
The borrower is eligible for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive payment from their PPP lender.