The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the bill being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated 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 the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
Forgiveness terms for the initial draw of PPP loans
Student Loan Forgiveness Michigan – For eligible borrowers First Draw PPP loans are eligible to forgive loans. This applies when the loan payment is made within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan proceeds could be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds go to expenses for payroll
- How do I request loan forgiveness and when to apply
A borrower can apply for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.