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 that are in line with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours after the legislation was signed into law to simplify the process of applying for forgiveness. The legislation also contained 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 one-page form for PPP loan forgiveness within 24 hours from the date of the enactment of 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 that were updated.”
First Draw PPP Loan forgiveness terms
Teacher Loan Forgiveness And Pslf – First Draw PPP loans granted 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:
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8– to 24 week period.
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The loan funds can be used to pay payroll costs or other eligible expenses.
- At least 60% of the profits are used for the cost of payroll
- How to apply for loan forgiveness , and when
After all loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can request forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.
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