The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
List Of Public Service Jobs For Loan Forgiveness – For eligible borrowers, First Draw PPP loans are eligible to be forgiven. This is when the loan is disbursed within an 8 to 24-week timeframe.
- Employee and compensation levels are kept at a constant level.
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The proceeds of the loan could be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of profits are spent on payroll costs
- How do I request loan forgiveness and the time to apply
When all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered, then PPP loans are no longer deferred and borrowers must make loan payments to their PPP lender.