The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the latest stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned companies that had trouble 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 one-page PPP form loan forgiveness within 24 hours of the date of enactment under 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.”
Forgiveness terms for the first draw of PPP loans
Personal Loan Forgiveness Letter Sample – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8 to 24-week period after the loan’s disbursement
- The levels of compensation and employee pay are ensured
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers can be eligible 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 way as required for the First Draw PPP loan
- The loan proceeds could be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds go to payroll costs
- When and how do I apply for loan forgiveness
After all loan funds have been utilized, a borrower can apply for forgiveness. Borrowers may apply for forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are eligible to receive loan payments from their PPP lender.