The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them deal with the financial fallout of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. The legislation also contained conditions that would encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within the first 24 hours 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 new forms.”
First Draw PPP Loan forgiveness terms
Home Equity Loan Forgiveness – For those who qualify First Draw PPP loans are suitable to forgive loans. This applies when the loan payment is made within an 8 to 24 week period.
- This is also true for employee compensation and the.
- The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24 week time period after the loan’s disbursement
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds go to expenses for payroll
- How and when to apply for loan forgiveness
After all loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the period covered the PPP loan payments can not deferred any longer, and borrowers will begin making payment to their PPP lender.