The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, along with newly revised and updated forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress adopted 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 of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 days of the legislation being adopted to make the application process for forgiveness. It also included conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP 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.”
First Draw PPP Terms of loan forgiveness
Federal Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24-week period after loan disbursement:
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll and other eligible expenses; and
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is paid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness?
When all of the loan’s proceeds have been used the borrower is eligible for forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are able to receive the loan payment from their PPP lender.