The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The law required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to facilitate the application for forgiveness. It also included conditions to encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within the first 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Usda Student Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24 week period that follows the loan’s disbursement
- The levels of compensation and employee pay are kept at a constant level.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of the profits are used to pay for payroll expenses
- How do I apply for loan forgiveness and the time to apply
When all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months of the end of the time period that was covered the PPP loans are no longer deferred and borrowers will begin making loan payments to their PPP lender.