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, as well as 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 provided $284 billion of funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions that encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 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 issued more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Loan Forgiveness For Correctional Officers – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8 to 24 week period that follows the loan’s disbursement
- This is also true for compensation and employees.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week duration following loan payment:
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the funds go to payroll costs
- What is the best time to apply for loan forgiveness?
Once all of the loan proceeds have been used The borrower may apply to be granted forgiveness. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 years of the last day of the period covered and the loan is not renewed, PPP loan payments are no longer deferred and borrowers must make loan payments to their PPP lender.