The U.S. Small Business Administration released a one-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to conform to 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 funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, especially for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the obligation to issue 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. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”
Terms for forgiveness for the initial draw of PPP loans
Student Loan Forgiveness Pa – For borrowers who are eligible First Draw PPP loans can be suitable to forgive loans. This is when the loan payment is made within an 8– to 24-week period.
- It’s the same for pay and benefits for employees.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- A minimum of 60% of the profits go towards the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan proceeds could be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to the cost of payroll
- How do I request loan forgiveness and the time to apply
Once all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers may apply for forgiveness at any time until the date of maturity. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the period covered and the loan is not renewed, PPP loan payments can no longer deferred, and the borrower will be required to make payment to their PPP lender.