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, along with newly revised and updated forms to meet the requirements of 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 reduce the economic burden of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours after the legislation was adopted to make the application process for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that were unable to obtain 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 PPP form loan forgiveness within 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 released the updated forms.”
First Draw PPP Terms of loan forgiveness
Va Home Loan Foreclosure Forgiveness – For eligible borrowers, First Draw PPP loans are qualified to be forgiven. This applies when the loan payment is made within an 8– to 24 week period.
- Employee and compensation levels are kept at a constant level.
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week duration following loan payment:
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the profits go towards payroll costs
- How to apply for loan forgiveness , and when to apply
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the time period that was covered the PPP loan payments are no longer deferred and the borrower will be required to make payment to their PPP lender.