The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus epidemic. The law requires that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage community banks to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Conditions for loan forgiveness
University Of Phoenix Student Loan Debt Forgiveness – For those who qualify, First Draw PPP loans are qualified for loan forgiveness. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are maintained
- The proceeds of the loan can be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible customers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan funds could be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of funds go to expenses for payroll
- How and when to apply for loan forgiveness
After all loan proceeds have been used the borrower is eligible to be forgiven. Borrowers can request forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.