The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that comply with the latest 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 pandemic. The legislation required that the SBA release simplified forms within the first 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Conditions for loan forgiveness
Trusted Insight Loan Forgiveness All Former University Of North Dakota – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8- to 24 week period that follows loan disbursement:
- This is also true for employee compensation and the.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is repaid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- Minimum 60% of funds go to the cost of payroll
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive the loan payment from their PPP lender.