The U.S. Small Business Administration released a one-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the legislation being signed into law to simplify the procedure of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned businesses who 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 publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
Terms for forgiveness for the first draw of PPP loans
Us Dept Of Education Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be eligible to forgive loans. This applies when the loan payment is made within an 8 to 24 week period.
- This is also true for compensation and employees.
- The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan funds are used on payroll and other eligible expenses; and
- Minimum 60% of funds go to expenses for payroll
- How do I apply for loan forgiveness , and the time to apply
Once all of the loan’s proceeds have been used The borrower may apply to be forgiven. The borrower can request forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan will be able to receive loan payments from their PPP lender.