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 for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to meet the requirements of 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 forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The law requires that the SBA release 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 encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
First Draw PPP Loan forgiveness terms
How Likely Is It That Student Loans Will Be Forgiven – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24 week period that follows the disbursement of loan:
- Pay and worker levels are ensured
- 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
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week duration following the loan’s disbursement
- 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 as well as other eligible expenses and
- A minimum of 60% of the funds go to the cost of payroll
- How and when to apply for loan forgiveness
A borrower may apply for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive loan payments from their PPP lender.