The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of the enactment of 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.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Status – For eligible borrowers, First Draw PPP loans are qualified 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 proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan funds can be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the profits are spent on payroll costs
- How do I apply for loan forgiveness , and the time to apply
After all loan’s proceeds have been used The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the time period that was covered the PPP loan payments are no longer deferred and the borrower will be required to make payment to their PPP lender.