The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
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 outbreak. The law requires that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within the first 24 hours of 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 that were updated.”
Forgiveness terms for the initial draw of PPP loans
Are Student Loans Forgiven After 20 Years – For borrowers who are eligible, First Draw PPP loans are suitable to be forgiven. This applies when the loan is disbursed within an 8 to 24 week period.
- This is also true for pay and benefits for employees.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the 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 8to 24 week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The loan funds could be used to pay expenses for payroll or other eligible expenses.
- At least 60% of the profits are used for the cost of payroll
- How do I apply for loan forgiveness , and when to apply
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 month of the end date of the loan will be able to receive payment from their PPP lender.