The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the current stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, particularly for minority-owned businesses who were unable to obtain 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 one-page PPP form loan forgiveness within 24 days from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loans Forgiveness Form – For borrowers who are eligible First Draw PPP loans are suitable to forgive loans. This happens if the loan disbursement occurs within an 8 to 24-week timeframe.
- Pay and worker levels are maintained
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of profits are used for the cost of payroll
- How do I apply for loan forgiveness , and when
The borrower is eligible for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been used. The borrower can request forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive payment from their PPP lender.