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 the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours of the signing into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to lend more specifically to minority-owned companies that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
How To Apply For Student Loan Forgiveness Act – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness during the 8- to 24-week period after the loan’s disbursement
- This is also true for employee compensation and the.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week time period after the loan’s disbursement
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds can be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
- How and when to apply for loan forgiveness?
Once all of the loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are able to receive the loan payment from their PPP lender.