The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month, which offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. The legislation required that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days of 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 updated forms.”
Terms for forgiveness for the first draw of PPP loans
Will Federal Student Loans Be Forgiven – For those who qualify, First Draw PPP loans can be eligible to forgive loans. This is when the loan is disbursed within an 8– to 24-week period.
- The same goes for the compensation and employees.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week duration following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The proceeds of the loan could be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of the funds go to the cost of payroll
- When and how do I apply for loan forgiveness?
After all loan’s proceeds have been used The borrower may apply to be forgiven. Borrowers may apply for forgiveness at any time until the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.