The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions that would 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 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. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms in the first draw of PPP loans
How To Have Your Student Loans Forgiven – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24 week period that follows loan disbursement:
- Pay and worker levels are kept at a constant level.
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week time period after loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan funds are used on payroll as well as other eligible expenses and
- A minimum of 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness
Once all of the loan’s proceeds have been used the borrower is eligible to be forgiven. Borrowers may apply for forgiveness at any point up to the date of maturity. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive payment from their PPP lender.