The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the latest stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 days of the legislation being adopted to make the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
Forgiveness terms for the initial draw of PPP loans
Bnd Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be suitable for loan forgiveness. This happens when the loan payment is made within an 8– to 24-week period.
- It’s the same for compensation and employees.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week duration following loan payment:
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the proceeds go to payroll costs
- When and how do I apply for loan forgiveness?
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If they do not file for forgiveness within 10 months after the end of the time period that was covered, then PPP loan payments are no longer deferred and borrowers must make payment to their PPP lender.