The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month, which offered $284 billion in funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, particularly for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
Forgiveness terms in the first draw of PPP loans
Nova Scotia Student Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24-week period after loan disbursement:
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified customers are qualified for loan forgiveness if the loan is paid within an 8– to 24-week period.
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan funds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
- How and when to apply for loan forgiveness
When all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered, then PPP loans are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.