The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the latest stimulus law.
The COVID-19 aid package Congress approved last month renewed 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. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the bill being adopted to make the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for 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 released new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
Forms Of Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be suitable for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week period.
- Pay and worker levels are kept at a constant level.
- The proceeds of the loan can be used to pay for payroll costs or other eligible expenses.
- 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 customers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- Minimum 60% of funds go to the cost of payroll
- How to apply for loan forgiveness , and the time to apply
When all of the loan proceeds have been used the borrower is eligible for forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not 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.