The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 days of the bill being signed into law to simplify the process of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours of the date of enactment under 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.”
Forgiveness terms for the first draw of PPP loans
Brown Mackie College Loan Forgiveness – For eligible borrowers First Draw PPP loans can be eligible to forgive loans. This applies when the loan is disbursed within an 8 to 24 week period.
- It’s the same for compensation and employees.
- The loan funds are used on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week time period after loan disbursement:
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds could be used to pay for expenses for payroll or other eligible expenses.
- Minimum 60% of funds go to expenses for payroll
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any time until the loan’s maturity date. If they do not file for forgiveness within 10 months of the last day of the period covered the PPP loan payments can not deferred any longer, and borrowers will begin making payment to their PPP lender.