The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus outbreak. The law required that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within the first 24 hours from 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 issued additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Services Loan Forgiveness Company – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This happens if the loan disbursement occurs within an 8– to 24-week period.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds from the loan may be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness if the loan is paid within an 8– to 24-week time frame.
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness
When all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any time until the date of maturity. Borrowers who do not request forgiveness within 10 month of the end date of the loan are able to receive loan payments from their PPP lender.