The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP 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 released new forms.”
Terms for forgiveness for the initial draw of PPP loans
Do University Employees Qualify For Public Service Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness and when
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. The borrower can request forgiveness at any time prior to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan will be able to receive loan payments from their PPP lender.
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