The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The legislation required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 days from 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 the updated forms.”
Forgiveness terms in the initial draw of PPP loans
Ccraa Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans can be eligible for loan forgiveness. This is when the loan is disbursed within an 8 to 24 week period.
- The levels of compensation and employee pay are maintained
- The proceeds from the loan may be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to expenses for payroll
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.