The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses who 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 24 hours of 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 published updated forms.”
First Draw PPP Loan forgiveness terms
Loan Forgiveness Application Form – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24-week covered period following the disbursement of loan:
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds are spent on payroll costs
- When and how do I apply for loan forgiveness?
A borrower can apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan will be able to receive the loan payment from their PPP lender.