The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. The law requires that the SBA provide simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans in the past.
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 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 released new forms that were updated.”
Forgiveness terms for the first draw of PPP loans
Student Loan Forgiveness For Nurses In Indiana – For eligible borrowers First Draw PPP loans can be qualified to be forgiven. This happens when the loan payment is made within an 8 to 24-week period.
- The levels of compensation and employee pay are ensured
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness when the loan is paid within an 8– to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan could be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds go to the cost of payroll
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers can request forgiveness at any time until the date of maturity. Borrowers who do not request forgiveness within 10 month of the end date of the loan are able to receive loan payments from their PPP lender.