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 is also updated with new forms to comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the bill being signed into law to simplify the process of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, especially for minority-owned companies that were unable to obtain 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 the first 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 issued new forms that were updated.”
Forgiveness terms for the first draw of PPP loans
Will Congress Forgive Student Loans – For borrowers who are eligible First Draw PPP loans can be suitable for loan forgiveness. This is when the loan is disbursed within an 8– to 24-week timeframe.
- It’s the same for employee compensation and the.
- The proceeds of the loan can be used to cover the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers are eligible for loan repayment when the loan is repaid within an 8– to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- A minimum of 60% of profits are spent on payroll costs
- How do I request loan forgiveness and when to apply
A borrower may apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. The borrower can request forgiveness at any time prior to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive the loan payment from their PPP lender.