The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
Forgiveness terms in the first draw of PPP loans
New York State Student Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are eligible to be forgiven. This happens if the loan disbursement occurs within an 8– to 24-week period.
- This is also true for pay and benefits for employees.
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week time period after the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of proceeds are spent on payroll costs
- What is the best time to apply for loan forgiveness?
The borrower is eligible for forgiveness once the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 years of the last day of the covered period the PPP loan payments can not deferred any longer, and borrowers will begin making loan payments to their PPP lender.