The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the latest stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and 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 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 published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Liberty Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This happens when the loan payment is made within an 8 to 24-week period.
- The same goes for the compensation and employees.
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of profits are used to pay for payroll expenses
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time until the date of maturity. If the borrower does not apply for forgiveness within 10 months after the end of the period covered and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers must make monthly payments to their PPP lender.