The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the bill being signed into law to simplify the process of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, particularly for minority-owned companies that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days from 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 published updated forms.”
First Draw PPP Loan forgiveness terms
Low Income Student Loan Forgiveness – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24 week period that follows loan disbursement:
- The levels of compensation and employee pay are ensured
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week duration following loan payment:
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of the profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness?
When all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.