The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the process of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, specifically for minority-owned companies that 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 one-page PPP form loan forgiveness within 24 hours 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 issued the updated forms.”
First Draw PPP Loan forgiveness terms
How To Sign Up For Student Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24-week period after loan disbursement:
- The levels of compensation and employee pay are ensured
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of profits are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is paid within an 8to 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan funds can be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness?
When all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.