The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Scams – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24 week period that follows the loan’s disbursement
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is repaid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- Minimum 60% of profits go towards the cost of payroll
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive the loan payment from their PPP lender.