The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the current stimulus law.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 days of the bill being adopted to make the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Loan forgiveness terms
100 Service Connected Disability Student Loan Forgiveness – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week covered period following loan disbursement:
- Pay and worker levels are maintained
- The proceeds from the loan may be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible customers are eligible for loan forgiveness if the loan is paid within an 8to 24-week period.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds go to the cost of payroll
- What is the best time to apply for loan forgiveness?
After all loan funds have been utilized, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If they do not file for forgiveness within 10 months of the date of expiration of the time period that was covered, then PPP loan payments are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.