The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 hours of the bill being adopted to make the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish 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 on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
Forgiveness terms for the initial draw of PPP loans
Loan Forgiveness Ppp – For eligible borrowers, First Draw PPP loans are eligible to be forgiven. This happens when the loan is disbursed within an 8– to 24-week timeframe.
- This is also true for compensation and employees.
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The proceeds of the loan could be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits are spent on payroll costs
- When and how do I apply for loan forgiveness
A borrower may apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any point up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.