The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the current stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Is Student Loan Forgiveness In Covid Bill – First Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness within the 8-to 24-week period after the disbursement of loan:
- It’s the same for pay and benefits for employees.
- The proceeds from the loan may be used to pay for payroll costs or other eligible expenses.
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week duration following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exact same way.
- The loan proceeds could be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
After all loan funds have been utilized the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 years of the last day of the time period that was covered the PPP loan payments are no longer deferred and borrowers must make payment to their PPP lender.