The U.S. Small Business Administration released a one-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the application process for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned businesses that 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 publish the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Loan forgiveness terms
Bnd Loan Forgiveness Forms – First Draw PPP loans granted 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 expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week time period after loan payment:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- A minimum of 60% of proceeds are spent on payroll costs
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers must make loan payments to their PPP lender.