The U.S. Small Business Administration released a one-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the latest stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. It also included conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement 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 new forms.”
Terms for forgiveness for the first draw of PPP loans
PPP Loan Forgiveness Application Documentation Requirements – For those who qualify, First Draw PPP loans can be eligible to be forgiven. This happens when the loan is disbursed within an 8 to 24-week period.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds of the loan can be used to cover the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness , and when
A borrower may apply for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are able to receive payment from their PPP lender.