The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 days after the legislation was adopted to make the process of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Acs Perkins Loan Forgiveness Form – For borrowers who are eligible, First Draw PPP loans are eligible to be forgiven. This happens when the loan payment is made within an 8 to 24-week period.
- Pay and worker levels are ensured
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week time period after the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan funds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
When all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. The borrower can request forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the end of the period covered, then PPP loan payments can no longer deferred and borrowers will begin making monthly payments to their PPP lender.