The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The law required that the SBA issue simplified forms within the first 24 hours of the signing into law. This is to facilitate the application 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, said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days 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 new forms.”
Forgiveness terms in the first draw of PPP loans
2022 Maine Tax Loan Forgiveness Forms – For borrowers who are eligible, First Draw PPP loans are eligible for loan forgiveness. This is when the loan payment is made within an 8 to 24-week timeframe.
- Pay and worker levels are maintained
- The proceeds from the loan may be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is repaid within an 8to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The proceeds of the loan could be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of the profits are used to pay for payroll expenses
- How do I apply for loan forgiveness , and the time to apply
The borrower is eligible for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the period covered the PPP loans are no longer deferred and borrowers will begin making loan payments to their PPP lender.