The U.S. Small Business Administration released a one-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the process of applying for forgiveness, along with conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that struggled to get loans last year.
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 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.”
Forgiveness terms for the initial draw of PPP loans
Obama Mortgage Loan Forgiveness Program – First Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness within the 8-to 24 week period that follows loan disbursement:
- This is also true for employee compensation and the.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- A minimum of 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness and when
After all loan’s proceeds have been used the borrower is eligible to be forgiven. The borrower can request forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the period covered the PPP loan payments are no longer deferred, and borrowers will begin making monthly payments to their PPP lender.