The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, especially for minority-owned companies that had trouble 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 PPP form, which is one page long, for loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released additional updated forms.”
Forgiveness terms for the initial draw of PPP loans
Teacher Loan Forgiveness Faq – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24 week period that follows loan disbursement:
- This is also true for compensation and employees.
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness when the loan is paid within an 8– to 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness and the time to apply
A borrower can apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.