The U.S. Small Business Administration released a one-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that comply with the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The law requires that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 days from 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 released additional updated forms.”
Forgiveness terms in the first draw of PPP loans
100 Disabled Veteran Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness during the 8- to 24 week period that follows the disbursement of loan:
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds can be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of profits are used to pay for payroll expenses
- How to apply for loan forgiveness , and when
When all of the loan’s proceeds have been used the borrower is eligible to be forgiven. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan are able to receive payment from their PPP lender.