The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was signed into law to simplify the process of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released additional updated forms.”
First Draw PPP Loan forgiveness terms
Cornerstone Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are suitable to be forgiven. This applies 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 used on payroll expenses and other eligible expenses; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan funds are used on payroll as well as other eligible expenses and
- Minimum 60% of proceeds go to the cost of payroll
- How to request loan forgiveness and when to apply
When all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any point up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan will be able to receive the loan payment from their PPP lender.