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 that meet the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the signing into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more specifically to minority-owned companies that had difficulty getting loans in the past.
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 from 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 updated forms.”
Terms for forgiveness for the first draw of PPP loans
Federal Student Loan Forgiveness Public Service – For eligible borrowers, First Draw PPP loans are suitable to forgive loans. This is if the loan disbursement occurs within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- A minimum of 60% of the funds go to expenses for payroll
- How to apply for loan forgiveness , and the time to apply
Once all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the end of the period covered and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.