The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. The law requires that the SBA issue simplified forms within the first 24 hours of the signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions to encourage community banks to lend more specifically to minority-owned companies that had difficulty getting 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 hours of the date of the enactment of 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 more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Us Financial Student Loan Forgiveness Scam – For those who qualify First Draw PPP loans can be eligible to forgive loans. This applies when the loan is disbursed within an 8– to 24 week period.
- Pay and worker levels are ensured
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week duration following the loan’s disbursement
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- Minimum 60% of funds go to the cost of payroll
- What is the best time to apply for loan forgiveness
After all loan’s proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can request forgiveness at any time prior to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan will be able to receive the loan payment from their PPP lender.