The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The legislation required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours of 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 that were updated.”
Terms for forgiveness for the initial draw of PPP loans
Do I Qualify For Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness during the 8- to 24-week covered period following loan disbursement:
- Pay and worker levels are kept at a constant level.
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week time period after loan payment:
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll expenses as well as other eligible expenses and
- A minimum of 60% of profits are used for the cost of payroll
- How do I apply for loan forgiveness and when
The borrower is eligible for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.