The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that struggled to get 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 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 published new forms.”
Forgiveness terms in the initial draw of PPP loans
B On Time Loan Forgiveness Form – For eligible borrowers First Draw PPP loans can be qualified to forgive loans. This applies when the loan payment is made within an 8 to 24-week period.
- The same goes for the compensation and employees.
- The loan proceeds are used on payroll and other eligible expenses; and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of funds go to the cost of payroll
- How do I request loan forgiveness and when
A borrower may apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can request forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the last day of the time period that was covered and the loan is not renewed, PPP loan payments can not deferred any longer, and the borrower will be required to make payment to their PPP lender.