The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, along with 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 of funds for small businesses that want forgiven loans to help deal with the financial fallout of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the legislation being adopted to make the process of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released additional updated forms.”
Forgiveness terms for the first draw of PPP loans
Fed Loan Forgiveness For Nurses – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is paid within an 8to 24-week time frame.
- 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 expenses and other expenses that are eligible 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 proceeds have been used The borrower may apply to be granted forgiveness. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 years of the end of the covered period the PPP loan payments can not deferred any longer, and borrowers must make payment to their PPP lender.