The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of 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 forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The law required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said 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 in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
Forgiveness terms in the first draw of PPP loans
PPP Loan Forgiveness Application Bluevine – For those who qualify, First Draw PPP loans are qualified to be forgiven. This applies if the loan disbursement occurs within an 8 to 24 week period.
- The same goes for the pay and benefits for employees.
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible customers are qualified for loan forgiveness when the loan is paid within an 8– 24 week time frame.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness , and when
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months after the end of the covered period, then PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.