The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned companies that 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 one-page form for PPP loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
Forgiveness terms in the first draw of PPP loans
Grand Canyon University Student Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24-week period after loan disbursement:
- The same goes for the compensation and employees.
- The loan funds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is paid within an 8– 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
- When and how do I apply for loan forgiveness?
Once all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any point up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.