The U.S. Small Business Administration released a one-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses that needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being adopted to make the procedure of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
Forgiveness terms for the first draw of PPP loans
Your Student Loans Are Flagged For Forgiveness – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24 week period that follows the disbursement of loan:
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are spent on payroll expenses 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 to qualified borrowers can be qualified for loan forgiveness if the loan is paid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan proceeds could be used to pay for payroll costs or other eligible expenses.
- Minimum 60% of funds go to payroll costs
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time until the date at which the loan matures. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan will be able to receive loan payments from their PPP lender.