The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the current stimulus law.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 days of the bill being signed into law to simplify the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses who had trouble getting loans in the past.
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 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Aes Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24 week period that follows loan disbursement:
- Employee and compensation levels are kept at a constant level.
- The loan proceeds can be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan proceeds are used on payroll as well as other eligible expenses and
- Minimum 60% of funds go to expenses for payroll
- How to apply for loan forgiveness , and the time to apply
After all loan proceeds have been used the borrower is eligible for forgiveness. Borrowers can request forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 months after the date of expiration of the period covered, then PPP loan payments are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.