The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the latest stimulus law.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The law required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days 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 issued new forms.”
First Draw PPP Loan forgiveness terms
Louisiana Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be qualified to forgive loans. This is when the loan payment is made within an 8 to 24 week period.
- The levels of compensation and employee pay are ensured
- The proceeds from the loan may be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week time period after loan payment:
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of funds go to expenses for payroll
- What is the best time to apply for loan forgiveness?
Once all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. The borrower can apply for forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are eligible to receive loan payments from their PPP lender.