The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The legislation required that the SBA provide 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 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 wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 days of 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 released updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Fake Student Loan Forgiveness Calls – For eligible borrowers, First Draw PPP loans can be suitable to be forgiven. This happens if the loan disbursement occurs within an 8– to 24-week period.
- Pay and worker levels are ensured
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of the 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 forgiveness if the loan is paid within an 8– 24-week period.
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds could be used to cover payroll costs or other expenses that are eligible.
- At least 60% of the profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the last day of the period covered, then PPP loan payments are no longer deferred and the borrower will be required to make loan payments to their PPP lender.