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 that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the process of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, particularly for minority-owned companies that were unable to obtain 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 the first 24 hours of 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 issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Specialist – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week period after the loan’s disbursement
- It’s the same for employee compensation and the.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is repaid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- Minimum 60% of proceeds go to payroll costs
- How to apply for loan forgiveness and when to apply
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.
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