The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain 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 form for PPP loan forgiveness within 24 hours from 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 published more updated forms.”
First Draw PPP Loan forgiveness terms
80 Disabled Veteran Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.
- The same goes for the compensation and employees.
- The proceeds from the loan may be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified customers are qualified for loan forgiveness if the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exact same way.
- The loan proceeds could be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness and when
A borrower can apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been utilized. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive loan payments from their PPP lender.