The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and provided $284 billion of funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. The legislation also contained conditions that would encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours 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 the updated forms.”
First Draw PPP Conditions for loan forgiveness
Apply For Ppp Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified to be forgiven. This applies when the loan payment is made within an 8– to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to cover payroll costs or other eligible expenses.
- At least 60% of funds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week duration following loan payment:
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- How and when to apply for loan forgiveness?
The borrower is eligible for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.