The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was adopted to make the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, particularly for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days 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 more updated forms.”
First Draw PPP Loan forgiveness terms
Loan Forgiveness Non Profit Form – For those who qualify First Draw PPP loans can be eligible for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.
- It’s the same for pay and benefits for employees.
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is repaid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exact same way.
- The loan funds could be used to pay for payroll costs or other eligible expenses.
- At least 60% of profits are used for the cost of payroll
- How and when to apply for loan forgiveness
Once all of the loan’s proceeds have been used, a borrower can apply for forgiveness. Borrowers can request forgiveness at any point up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 months of the end date of the loan will be able to receive payment from their PPP lender.