The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The legislation required that the SBA provide simplified forms within 24 hours of the signing into law. This was to facilitate the application for forgiveness. It also included conditions that encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Form Non Profit – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8 to 24 week period that follows loan disbursement:
- It’s the same for employee compensation and the.
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits are used for the cost of payroll
- What is the best time to apply for loan forgiveness
Once all of the loan funds have been utilized The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the end of the time period that was covered the PPP loans are no longer deferred and the borrower will be required to make payment to their PPP lender.