The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was adopted to make the application process for forgiveness, along with conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses who had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued additional updated forms.”
Forgiveness terms in the initial draw of PPP loans
How To Get Loan Forgiveness – For those who qualify, First Draw PPP loans are eligible for loan forgiveness. This applies if the loan disbursement occurs within an 8 to 24 week period.
- It’s the same for pay and benefits for employees.
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are eligible for loan repayment if the loan is paid within an 8to 24-week period.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits go towards payroll costs
- How do I request loan forgiveness and when
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any point up to the date of maturity. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.