The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
Terms for forgiveness for the initial draw of PPP loans
Did Student Loan Forgiveness Pass – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week covered period following the disbursement of loan:
- Employee and compensation levels are kept at a constant level.
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible customers are qualified for loan forgiveness when the loan is paid within an 8– to 24 week time frame.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The loan funds could be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness
After all loan’s proceeds have been used the borrower is eligible for forgiveness. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the end date of the loan will be able to receive payment from their PPP lender.