The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent 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 forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The law required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. The legislation also contained conditions that would encourage community banks to make more loans specifically to minority-owned companies 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 issue the PPP form, which is one page long, for loan forgiveness within the first 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 issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Federal Loan Public Service Forgiveness Form – For borrowers who are eligible First Draw PPP loans can be suitable for loan forgiveness. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- Employee and compensation levels are maintained
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The proceeds of the loan could be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of profits are used for the cost of payroll
- What is the best time to apply for loan forgiveness
Once all of the loan funds have been utilized the borrower is eligible to be granted forgiveness. The borrower can 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 last day of the covered period and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers must make monthly payments to their PPP lender.