The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the application process for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
Forgiveness terms for the first draw of PPP loans
Loan Forgiveness Us – For borrowers who are eligible, First Draw PPP loans are eligible to be forgiven. This applies when the loan payment is made within an 8 to 24-week timeframe.
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week time period after loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of profits are spent on payroll costs
- How to apply for loan forgiveness and when
A borrower can apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the time period that was covered, then PPP loan payments can no longer deferred, and borrowers must make payment to their PPP lender.