The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and provided $284 billion of funding to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus epidemic. The law required that the SBA release simplified forms within 24 hours of the signing into law. This was to facilitate the application for forgiveness. Additionally, it included conditions to encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Requirements – For borrowers who are eligible, First Draw PPP loans are eligible for loan forgiveness. This is when the loan payment is made within an 8 to 24 week period.
- The same goes for the employee compensation and the.
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is paid within an 8– 24 week period.
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness
After all loan proceeds have been used, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time until the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are able to receive loan payments from their PPP lender.