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 that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote 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 enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Terms of loan forgiveness
Loan Forgiveness For Doctors In Rural Areas – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24 week period that follows loan disbursement:
- The same goes for the compensation and employees.
- The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible customers are eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the identical manner.
- The proceeds of the loan could be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds go to payroll costs
- How to request loan forgiveness and the time to apply
Once all of the loan funds have been utilized the borrower is eligible to be granted forgiveness. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the period covered, then PPP loan payments can not deferred any longer, and borrowers must make monthly payments to their PPP lender.