The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in 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 release simplified forms within 24 hours of the signing into law. This is to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to lend more specifically to minority-owned companies that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours from 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 additional updated forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness For Special Needs Parents – For eligible borrowers, First Draw PPP loans can be suitable to be forgiven. This applies if the loan disbursement occurs within an 8 to 24-week period.
- The same goes for the pay and benefits for employees.
- The loan proceeds are used on payroll and other eligible expenses; and
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of the proceeds are used for the cost of payroll
- How do I apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness once all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time up to the date at which the loan matures. If they do not file for forgiveness within 10 months of the date of expiration of the period covered, then PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.