The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. It also included conditions that would encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated 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 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 new forms that were updated.”
First Draw PPP Loan forgiveness terms
PPP 2 Loan Forgiveness Form – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8- to 24 week period that follows the disbursement of loan:
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week time period after loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exactly the same manner.
- The loan funds could be used to pay for the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of proceeds go to expenses for payroll
- How to apply for loan forgiveness , and when
After all loan proceeds have been used The borrower may apply for forgiveness. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the last day of the covered period the PPP loan payments are no longer deferred, and borrowers must make loan payments to their PPP lender.