The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Terms of loan forgiveness
Loan Forgiveness Public Service Jobs – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24-week covered period following loan disbursement:
- Employee and compensation levels are kept at a constant level.
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment when the loan is repaid within an 8to 24 week time frame.
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness , and when to apply
A borrower may apply for forgiveness after 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 date at which the loan matures. If they do not file for forgiveness within 10 years of the last day of the time period that was covered the PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.