The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days 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 additional updated forms.”
Forgiveness terms for the first draw of PPP loans
Forgive All Student Loans – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8-to 24 week period that follows the loan’s disbursement
- Employee and compensation levels are ensured
- The loan proceeds are spent on payroll and other expenses that are eligible and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8– 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are used for the cost of payroll
- How do I request loan forgiveness and the time to apply
When all of the loan funds have been utilized, a borrower can apply for forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the date of expiration of the covered period the PPP loan payments are no longer deferred and borrowers will begin making monthly payments to their PPP lender.