The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The legislation required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Nd Stem Loan Forgiveness Application – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24 week period that follows the loan’s disbursement
- This is also true for compensation and employees.
- The proceeds of the loan can be used to pay the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive the loan payment from their PPP lender.