The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the application process for forgiveness, along with conditions that aim to increase the number of 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, said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 days from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
Forgiveness terms for the first draw of PPP loans
Post Office Employees Student Loan Forgiveness – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week covered period following the disbursement of loan:
- Pay and worker levels are ensured
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan funds are used on payroll costs as well as other eligible expenses and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.