The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The law requires that the SBA issue simplified forms within the first 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
First Draw PPP Conditions for loan forgiveness
Maine Loan Forgiveness – For eligible borrowers First Draw PPP loans are eligible for loan forgiveness. This is if the loan disbursement occurs within an 8– to 24-week period.
- It’s the same for compensation and employees.
- The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified customers are eligible for loan repayment when the loan is repaid within an 8to 24-week time frame.
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds could be used to cover payroll costs or other expenses that are eligible.
- At least 60% of the proceeds are spent on payroll costs
- How do I request loan forgiveness and the time to apply
Once all of the loan proceeds have been used, a borrower can apply to be forgiven. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.