The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and 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. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued more updated forms.”
First Draw PPP Conditions for loan forgiveness
What Happens If Student Loans Are Forgiven – For borrowers who are eligible First Draw PPP loans are eligible for loan forgiveness. This applies when the loan is disbursed within an 8– to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are used on payroll and other expenses that are eligible and
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is paid within an 8– 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness
When all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the end of the time period that was covered, then PPP loan payments are not deferred any longer, and borrowers will begin making payment to their PPP lender.