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 to comply with the latest stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 hours of the legislation being adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, especially for minority-owned companies that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Conditions for loan forgiveness
Plus Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be qualified for loan forgiveness. This happens when the loan is disbursed within an 8 to 24 week period.
- The levels of compensation and employee pay are ensured
- The proceeds from the loan may be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is paid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan funds can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
- How to apply for loan forgiveness , and the time to apply
Once all of the loan proceeds have been used the borrower is eligible to be forgiven. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months of the end of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.