The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish 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 more updated forms.”
First Draw PPP Terms of loan forgiveness
PPP Loan Forgiveness Application Assistance – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24-week covered period following the loan’s disbursement
- Pay and worker levels are kept at a constant level.
- The proceeds of the loan can be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week duration following the loan’s disbursement
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits are used for the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
A borrower can apply for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any time until the date of maturity. 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.