The U.S. Small Business Administration has released a single-page 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 revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, especially for minority-owned businesses who struggled to get loans in the past.
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 of 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 updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Maine Loan Forgiveness Programs – 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 period.
- Pay and worker levels are ensured
- The loan funds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan funds could be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
Once all of the loan’s proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.