The U.S. Small Business Administration released a one-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The law required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more, especially to minority-owned businesses who 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 published the updated forms.”
First Draw PPP Loan forgiveness terms
Companies That Forgive Student Loans – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week period after the loan’s disbursement
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is repaid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of profits are spent on payroll costs
- How to apply for loan forgiveness , and when to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 months of the end of the period covered and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers must make payment to their PPP lender.