The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Terms for forgiveness for the first draw of PPP loans
Eidl Loan Forgiveness Update – For those who qualify First Draw PPP loans are qualified to forgive loans. This applies when the loan is disbursed within an 8 to 24-week period.
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is repaid within an 8to 24 week time frame.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- At least 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
After all loan proceeds have been used, a borrower can apply for forgiveness. The borrower can apply for forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 months of the end of the covered period, then PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.