The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses that needed loans. The funds were used to mitigate the economic effects of the coronavirus outbreak. 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. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned companies that struggled to get 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 one-page form for PPP loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
Forgiveness terms in the initial draw of PPP loans
Kansas Student Loan Forgiveness Teachers – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24 week period that follows the disbursement of loan:
- It’s the same for employee compensation and the.
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8to 24-week time frame.
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- At least 60% of proceeds go to payroll costs
- How to apply for loan forgiveness and the time to apply
Once all of the 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 loan’s maturity date. If the borrower does not apply for forgiveness within 10 years of the end of the period covered the PPP loan payments can no longer deferred and borrowers must make payment to their PPP lender.