The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking 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 the first 24 hours of the bill being signed into law to simplify the application process for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, 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. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Taxes On Student Loan Forgiveness Due To Disability – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24-week period after the disbursement of loan:
- It’s the same for employee compensation and the.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is paid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of the profits are spent on payroll costs
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the period covered, then PPP loans are no longer deferred and borrowers will begin making monthly payments to their PPP lender.