The U.S. Small Business Administration has released a single-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The law required that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
Forgiveness terms for the first draw of PPP loans
Debt Forgiveness Student Loans 20 Years – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if within the 8 to 24-week covered period following the disbursement of loan:
- The same goes for the compensation and employees.
- The proceeds of the loan can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of funds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The loan proceeds are used on payroll as well as other eligible expenses and
- At least 60% of profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness?
When all of the loan proceeds have been used, a borrower can apply to be forgiven. The borrower can apply for forgiveness at any point up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.