The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding for small-scale businesses who needed 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 24 hours after the legislation was adopted to make 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 stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Terms of loan forgiveness
Will My Student Loans Be Forgiven – For those who qualify, First Draw PPP loans can be qualified to be forgiven. This is when the loan is disbursed within an 8 to 24 week period.
- The same goes for the compensation and employees.
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week duration following the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan could be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the funds go to payroll costs
- How to apply for loan forgiveness , and when
When all of the loan proceeds have been used the borrower is eligible to be forgiven. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the period covered and the loan is not renewed, PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.