The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within the first 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Loan forgiveness terms
Ecsi Perkins Loan Forgiveness Form – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness during the 8- to 24-week period after the disbursement of loan:
- The levels of compensation and employee pay are maintained
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8– to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan funds are used on payroll costs and other eligible expenses; and
- Minimum 60% of funds go to payroll costs
- How do I apply for loan forgiveness and the time to apply
When all of the loan proceeds have been used, a borrower can apply to be forgiven. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the period covered, then PPP loan payments can no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.