The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete 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 relief package that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 days of the bill being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses who had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours 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 the updated forms.”
Forgiveness terms for the first draw of PPP loans
Do Student Loan Forgiveness Programs Call You – For borrowers who are eligible First Draw PPP loans are suitable to be forgiven. This happens when the loan is disbursed within an 8– to 24-week period.
- This is also true for compensation and employees.
- The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are eligible for loan repayment when the loan is paid within an 8to 24-week time frame.
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds could be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to expenses for payroll
- How and when to apply for loan forgiveness
When all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan will be able to receive payment from their PPP lender.
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