The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the one-page PPP form 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 additional updated forms.”
First Draw PPP Loan forgiveness terms
10 Year Loan Forgiveness Form – For borrowers who are eligible, First Draw PPP loans can be suitable for loan forgiveness. This is if the loan disbursement occurs 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 expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week time period after loan payment:
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
A borrower can apply for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan will be able to receive loan payments from their PPP lender.