The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the application process for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses who struggled to get loans last year.
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. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms in the first draw of PPP loans
PPP Loan Forgiveness Application Bank Of America – For eligible borrowers, First Draw PPP loans can be qualified for loan forgiveness. This is when the loan is disbursed within an 8 to 24-week period.
- It’s the same for compensation and employees.
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds could be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are used for the cost of payroll
- How to apply for loan forgiveness , and when
A borrower can apply for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can request forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are able to receive payment from their PPP lender.