The U.S. Small Business Administration released a one-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The law required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was to facilitate the application for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for 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 published additional updated forms.”
First Draw PPP Terms of loan forgiveness
When Will Student Loans Be Forgiven – For those who qualify First Draw PPP loans can be suitable to forgive loans. This applies when the loan payment is made within an 8 to 24 week period.
- It’s the same for employee compensation and the.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan proceeds could be used to pay for payroll costs or other eligible expenses.
- 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’s proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can apply for forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the covered period the PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.