The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 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 released the updated forms.”
First Draw PPP Conditions for loan forgiveness
Is There Student Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are eligible for loan forgiveness. This happens when the loan is disbursed within an 8– to 24-week period.
- Employee and compensation levels are kept at a constant level.
- The proceeds of the loan can be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week duration following loan payment:
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the proceeds go to payroll costs
- How do I apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers can request forgiveness at any time up to the date at which the loan matures. If they do not file for forgiveness within 10 months after the date of expiration of the time period that was covered the PPP loan payments are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.