The U.S. Small Business Administration has released a 1-page form which makes it simpler to request 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 passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The law requires that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. It also included 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. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
Forgiveness terms in the first draw of PPP loans
Educational Service Agency Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24 week period that follows the loan’s disbursement
- It’s the same for compensation and employees.
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan proceeds are used on payroll and other eligible expenses; and
- At least 60% of the proceeds are used for the cost of payroll
- How to apply for loan forgiveness and when to apply
When all of the loan’s proceeds have been used The borrower may apply to be forgiven. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months of the end of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred and borrowers will begin making payment to their PPP lender.