The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the latest stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours of 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 released new forms that were updated.”
Forgiveness terms in the first draw of PPP loans
Virginia College Loan Forgiveness 2022 – For those who qualify, First Draw PPP loans can be suitable to be forgiven. This applies when the loan is disbursed within an 8 to 24 week period.
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds could be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of proceeds are spent on payroll costs
- How to request loan forgiveness and the time to apply
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any time up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months after the last day of the period covered, then PPP loan payments are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.