The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding to small businesses that needed loans. This money was used to reduce the economic burden of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 days of 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 issued new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Government Loan Forgiveness – For eligible borrowers First Draw PPP loans can be qualified for loan forgiveness. This happens if the loan disbursement occurs within an 8- to 24 week period.
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8- to 24-week covered period following loan disbursement:
- 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 eligible expenses; and
- At least 60% of the profits are used for the cost of payroll
- When and how do I apply for loan forgiveness
After all loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.