The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The law requires that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote 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 in 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 additional updated forms.”
Forgiveness terms for the first draw of PPP loans
Eidl Loan Forgiveness 2022 – For eligible borrowers First Draw PPP loans are suitable for loan forgiveness. This applies when the loan is disbursed within an 8 to 24-week period.
- This is also true for employee compensation and the.
- The proceeds from the loan may be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week covered period following loan payment:
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- A minimum of 60% of the profits are spent on payroll costs
- How to request loan forgiveness and when
When all of the loan funds have been utilized, a borrower can apply to be forgiven. The borrower can request forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the end of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender.