The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Terms of loan forgiveness
Loan Forgiveness Definition – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24 week period that follows loan disbursement:
- It’s the same for employee compensation and the.
- The loan proceeds can be used to pay payroll costs or other eligible expenses.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week duration following the loan’s disbursement
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to expenses for payroll
- How do I request loan forgiveness and when
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any point up to the date at which the loan matures. If they do not file for forgiveness within 10 months of the last day of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.