The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which 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 law required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. It also included conditions that would encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days 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 issued updated forms.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness For Sallie Mae – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24 week period that follows the disbursement of loan:
- Employee and compensation levels are ensured
- The proceeds of the loan can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment when the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- A minimum of 60% of the proceeds go to expenses for payroll
- What is the best time to apply for loan forgiveness?
Once all of the loan proceeds have been used The borrower may apply to be granted forgiveness. The borrower can apply for forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 years of the date of expiration of the period covered, then PPP loans are no longer deferred and borrowers must make loan payments to their PPP lender.