The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 days of the legislation being adopted to make the application process for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Arkansas Department Of Education Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans can be eligible to forgive loans. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- Pay and worker levels are ensured
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8to 24 week period.
- The levels of compensation and employee pay are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
- How to apply for loan forgiveness and when
A borrower may apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any time until the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the last day of the period covered the PPP loan payments are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.