The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for 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 Terms of loan forgiveness
Student Loan Forgiveness Number – For eligible borrowers First Draw PPP loans are suitable to forgive loans. This is when the loan payment is made within an 8– to 24 week period.
- It’s the same for compensation and employees.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week covered period following loan disbursement:
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll as well as other eligible expenses and
- At least 60% of profits are spent on payroll costs
- How do I apply for loan forgiveness and when
After all loan funds have been utilized The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 months after the end of the time period that was covered the PPP loan payments can no longer deferred, and borrowers must make loan payments to their PPP lender.