The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and 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 included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being signed into law to simplify the application process for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days of 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 issued more updated forms.”
First Draw PPP Conditions for loan forgiveness
Department Of Education Loan Forgiveness Form – First Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24 week period that follows loan disbursement:
- Employee and compensation levels are maintained
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers are eligible for loan repayment when the loan is repaid within an 8– to 24-week time frame.
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness and when
When all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers can request forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are eligible to receive payment from their PPP lender.