The U.S. Small Business Administration released a one-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that 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 deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA release simplified forms within 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form 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 released additional updated forms.”
Forgiveness terms in the initial draw of PPP loans
How To Fill Out PPP Loan Forgiveness Form – First Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24 week period that follows loan disbursement:
- It’s the same for employee compensation and the.
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness if the loan is paid within an 8– 24-week time frame.
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- At least 60% of proceeds go to the cost of payroll
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 years of the end of the period covered the PPP loan payments can no longer deferred, and the borrower will be required to make loan payments to their PPP lender.