The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the most recent 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 forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The law requires that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
Forgiveness terms in the initial draw of PPP loans
Florida Nursing Student Loan Forgiveness Program Application – For those who qualify First Draw PPP loans are qualified to forgive loans. This happens when the loan is disbursed within an 8– to 24-week timeframe.
- Pay and worker levels are maintained
- The loan funds are used on payroll as well as other expenses eligible for reimbursement; and
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week time period after loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- Minimum 60% of funds go to payroll costs
- What is the best time to apply for loan forgiveness?
After all loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers may apply for forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the covered period, then PPP loan payments are no longer deferred, and borrowers must make payment to their PPP lender.