The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The legislation required that the SBA release simplified forms within 24 hours of the signing into law. This is to facilitate the application for forgiveness. The legislation also contained conditions that would encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
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 enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Loan forgiveness terms
How Do You Get Your Student Loans Forgiven – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- Employee and compensation levels are maintained
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers are eligible for loan repayment if the loan is paid within an 8– to 24 week period.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. The borrower can request forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan will be able to receive the loan payment from their PPP lender.