The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and included $284 billion of financing for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses that were unable to obtain 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 the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Application Citibank – For eligible borrowers First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.
- Employee and compensation levels are kept at a constant level.
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment if the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan proceeds could be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to payroll costs
- When and how do I apply for loan forgiveness?
After all loan proceeds have been used, a borrower can apply for forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the time period that was covered the PPP loan payments are no longer deferred and borrowers will begin making payment to their PPP lender.