The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses who had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 hours of 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 published new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
Navient Student Loan Forgiveness Number – 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 timeframe.
- The same goes for the pay and benefits for employees.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The proceeds of the loan could be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of the proceeds are used for the cost of payroll
- How do I apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the last day of the period covered and the loan is not renewed, PPP loan payments can not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.