The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus outbreak. The law requires that the SBA issue simplified forms within 24 hours of the signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for 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 new forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Tax Repayment Act Of 2022 – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24-week period after the disbursement of loan:
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness if the loan is paid within an 8– 24 week time frame.
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to the cost of payroll
- How do I apply for loan forgiveness and when to apply
Once all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can request forgiveness anytime up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the last day of the period covered, then PPP loan payments can no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.