The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 hours of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially 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 obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
Forgiveness terms for the initial draw of PPP loans
Pay As You Earn Student Loan Forgiveness Program – For eligible borrowers First Draw PPP loans can be suitable for loan forgiveness. This is if the loan disbursement occurs within an 8– to 24 week period.
- This is also true for employee compensation and the.
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll as well as other eligible expenses and
- A minimum of 60% of the profits go towards payroll costs
- How and when to apply for loan forgiveness?
When all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.