The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the current stimulus law.
The COVID-19 relief package that Congress adopted 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 from the coronavirus outbreak. The legislation required that the SBA issue simplified forms within 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. It also included conditions that encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Forgiveness terms for the first draw of PPP loans
Fedloan Student Loan Forgiveness Form – First Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24 week period that follows loan disbursement:
- It’s the same for pay and benefits for employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week covered period following the loan’s disbursement
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The proceeds of the loan could be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
After all loan proceeds have been used The borrower may apply to be forgiven. The borrower can apply for forgiveness at any time until the date of maturity. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive payment from their PPP lender.