The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the application process for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within the first 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
New Student Loan Forgiveness Guidelines – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness within the 8 to 24-week covered period following loan disbursement:
- The same goes for the compensation and employees.
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan funds could be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to payroll costs
- How do I request loan forgiveness and the time to apply
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the time period that was covered the PPP loan payments are no longer deferred and the borrower will be required to make loan payments to their PPP lender.