The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 days of the bill being adopted to make the application process for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Forgivable Loan – For those who qualify First Draw PPP loans are suitable for loan forgiveness. This happens when the loan is disbursed within an 8 to 24-week period.
- The same goes for the compensation and employees.
- The proceeds from the loan may be used to cover payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24 week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits are spent on payroll costs
- How do I apply for loan forgiveness , and when
Once all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.