The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the most recent stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially for minority-owned companies that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours from 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 released more updated forms.”
Forgiveness terms for the initial draw of PPP loans
What Is College Loan Forgiveness – For eligible borrowers, First Draw PPP loans are qualified to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of profits go towards payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits go towards the cost of payroll
- When and how do I apply for loan forgiveness
Once all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.