The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours after the legislation was signed into law to simplify the application process for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Form For Nurses – For eligible borrowers, First Draw PPP loans are eligible to forgive loans. This is if the loan disbursement occurs within an 8 to 24-week period.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week covered period following loan payment:
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- At least 60% of profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
When all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can request forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 months of the last day of the time period that was covered, then PPP loan payments can no longer deferred and borrowers will begin making payment to their PPP lender.