The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The law requires that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
First Draw PPP Loan forgiveness terms
Nyc Doe Loan Forgiveness Employment Verification Request Form – For borrowers who are eligible First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8– to 24 week period.
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the profits go towards payroll costs
- How to apply for loan forgiveness and the time to apply
After all loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the covered period and the loan is not renewed, PPP loans are no longer deferred, and borrowers will begin making payment to their PPP lender.