The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The law required that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Loan forgiveness terms
Best Loan Forgiveness Programs – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if within the 8-to 24-week covered period following loan disbursement:
- Employee and compensation levels are ensured
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week covered period following loan disbursement:
- Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- Minimum 60% of proceeds go to payroll costs
- How do I apply for loan forgiveness , and when to apply
Once all of the loan’s proceeds have been used, a borrower can apply to be forgiven. The borrower can request forgiveness any time up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months after the end of the covered period the PPP loan payments can not deferred any longer, and borrowers must make payment to their PPP lender.